Correlation Between Mercury Systems and Draganfly

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

By analyzing existing cross correlation between Mercury Systems and Draganfly, you can compare the effects of market volatilities on Mercury Systems and Draganfly 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 Mercury Systems with a short position of Draganfly. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mercury Systems and Draganfly.

Diversification Opportunities for Mercury Systems and Draganfly

-0.33

Correlation Coefficient

Mercury Systems  Draganfly

Very good diversification

The 3 months correlation between Mercury and Draganfly is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Mercury Systems and Draganfly in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Draganfly and Mercury Systems 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 Mercury Systems are associated (or correlated) with Draganfly. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Draganfly has no effect on the direction of Mercury Systems i.e., Mercury Systems and Draganfly go up and down completely randomly.

Pair Corralation between Mercury Systems and Draganfly

Given the investment horizon of 90 days Mercury Systems is expected to generate 0.41 times more return on investment than Draganfly. However, Mercury Systems is 2.42 times less risky than Draganfly. It trades about 0.02 of its potential returns per unit of risk. Draganfly is currently generating about -0.07 per unit of risk. If you would invest  4,200  in Mercury Systems on December 30, 2024 and sell it today you would earn a total of  82.00  from holding Mercury Systems or generate 1.95% return on investment over 90 days.

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

Mercury Systems  vs.  Draganfly

Mercury Systems

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Mercury Systems are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong fundamental indicators, Mercury Systems is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Draganfly

Risk-Adjusted Performance

Very Weak

Over the last 90 days Draganfly has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Mercury Systems and Draganfly

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

The idea behind Mercury Systems and Draganfly 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.