Correlation Between Moog and Dassault Aviation

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

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

Diversification Opportunities for Moog and Dassault Aviation

-0.31

Correlation Coefficient

Moog  Dassault Aviation

Very good diversification

The 3 months correlation between Moog and Dassault is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Moog Inc and Dassault Aviation SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dassault Aviation 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 Dassault Aviation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dassault Aviation has no effect on the direction of Moog i.e., Moog and Dassault Aviation go up and down completely randomly.

Pair Corralation between Moog and Dassault Aviation

Assuming the 90 days horizon Moog Inc is expected to generate 0.8 times more return on investment than Dassault Aviation. However, Moog Inc is 1.25 times less risky than Dassault Aviation. It trades about 0.13 of its potential returns per unit of risk. Dassault Aviation SA is currently generating about 0.04 per unit of risk. If you would invest  8,743  in Moog Inc on October 3, 2024 and sell it today you would earn a total of  10,758  from holding Moog Inc or generate 123.05% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	70.39%
Values	Daily Returns

Moog Inc  vs.  Dassault Aviation SA

Moog Inc

Risk-Adjusted Performance

0 of 100

Very 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 latest stock price disturbance, may contribute to short-term losses for the investors.

Dassault Aviation

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Dassault Aviation SA are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Dassault Aviation is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Moog and Dassault Aviation

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

The idea behind Moog Inc and Dassault Aviation SA 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.