Correlation Between Moog and Woodward

Can any of the company-specific risk be diversified away by investing in both Moog and Woodward 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 Woodward into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Moog Inc and Woodward, you can compare the effects of market volatilities on Moog and Woodward 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 Woodward. Check out your portfolio center. Please also check ongoing floating volatility patterns of Moog and Woodward.

Diversification Opportunities for Moog and Woodward

0.88

Correlation Coefficient

Moog  Woodward

Very poor diversification

The 3 months correlation between Moog and Woodward is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Moog Inc and Woodward in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Woodward 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 Woodward. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Woodward has no effect on the direction of Moog i.e., Moog and Woodward go up and down completely randomly.

Pair Corralation between Moog and Woodward

Assuming the 90 days horizon Moog Inc is expected to generate 1.37 times more return on investment than Woodward. However, Moog is 1.37 times more volatile than Woodward. It trades about 0.14 of its potential returns per unit of risk. Woodward is currently generating about 0.13 per unit of risk. If you would invest  18,671  in Moog Inc on September 2, 2024 and sell it today you would earn a total of  3,456  from holding Moog Inc or generate 18.51% return on investment over 90 days.

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

Moog Inc  vs.  Woodward

Moog Inc

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Moog Inc are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Moog sustained solid returns over the last few months and may actually be approaching a breakup point.

Woodward

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Woodward are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather conflicting basic indicators, Woodward exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Moog and Woodward

The main advantage of trading using opposite Moog and Woodward positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Moog position performs unexpectedly, Woodward 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 Woodward will offset losses from the drop in Woodward's long position.

The idea behind Moog Inc and Woodward 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.