Correlation Between Moog and Innovative Solutions

Can any of the company-specific risk be diversified away by investing in both Moog and Innovative Solutions at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Moog and Innovative Solutions into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Moog Inc and Innovative Solutions and, you can compare the effects of market volatilities on Moog and Innovative Solutions and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Moog with a short position of Innovative Solutions. Check out your portfolio center. Please also check ongoing floating volatility patterns of Moog and Innovative Solutions.

Diversification Opportunities for Moog and Innovative Solutions

0.56

Correlation Coefficient

Moog  Innovative Solutions

Very weak diversification

The 3 months correlation between Moog and Innovative is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Moog Inc and Innovative Solutions and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Innovative Solutions and and Moog is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Moog Inc are associated (or correlated) with Innovative Solutions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Innovative Solutions and has no effect on the direction of Moog i.e., Moog and Innovative Solutions go up and down completely randomly.

Pair Corralation between Moog and Innovative Solutions

Assuming the 90 days horizon Moog is expected to generate 2.85 times less return on investment than Innovative Solutions. In addition to that, Moog is 1.79 times more volatile than Innovative Solutions and. It trades about 0.03 of its total potential returns per unit of risk. Innovative Solutions and is currently generating about 0.16 per unit of volatility. If you would invest  722.00  in Innovative Solutions and on September 19, 2024 and sell it today you would earn a total of  64.00  from holding Innovative Solutions and or generate 8.86% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Moog Inc  vs.  Innovative Solutions and

Moog Inc

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Moog Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Moog is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Innovative Solutions and

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Innovative Solutions and are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Innovative Solutions exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Moog and Innovative Solutions

The main advantage of trading using opposite Moog and Innovative Solutions positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Moog position performs unexpectedly, Innovative Solutions can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Innovative Solutions will offset losses from the drop in Innovative Solutions' long position.

The idea behind Moog Inc and Innovative Solutions and pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Money Managers module to screen money managers from public funds and ETFs managed around the world.