Correlation Between Moog and Textron

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

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

Diversification Opportunities for Moog and Textron

0.07

Correlation Coefficient

Moog  Textron

Significant diversification

The 3 months correlation between Moog and Textron is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Moog Inc and Textron in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Textron 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 Textron. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Textron has no effect on the direction of Moog i.e., Moog and Textron go up and down completely randomly.

Pair Corralation between Moog and Textron

Assuming the 90 days horizon Moog Inc is expected to generate 1.56 times more return on investment than Textron. However, Moog is 1.56 times more volatile than Textron. It trades about 0.05 of its potential returns per unit of risk. Textron is currently generating about -0.05 per unit of risk. If you would invest  17,000  in Moog Inc on September 30, 2024 and sell it today you would earn a total of  1,987  from holding Moog Inc or generate 11.69% return on investment over 90 days.

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

Moog Inc  vs.  Textron

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.

Textron

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Textron has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Moog and Textron

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

The idea behind Moog Inc and Textron 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.