Correlation Between Preformed Line and Moog

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

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

Diversification Opportunities for Preformed Line and Moog

0.9

Correlation Coefficient

Preformed Line  Moog

Almost no diversification

The 3 months correlation between Preformed and Moog is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Preformed Line Products and Moog Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Moog Inc and Preformed Line 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 Preformed Line Products are associated (or correlated) with Moog. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Moog Inc has no effect on the direction of Preformed Line i.e., Preformed Line and Moog go up and down completely randomly.

Pair Corralation between Preformed Line and Moog

Given the investment horizon of 90 days Preformed Line Products is expected to under-perform the Moog. But the stock apears to be less risky and, when comparing its historical volatility, Preformed Line Products is 1.09 times less risky than Moog. The stock trades about -0.26 of its potential returns per unit of risk. The Moog Inc is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  20,326  in Moog Inc on October 16, 2024 and sell it today you would lose (235.00) from holding Moog Inc or give up 1.16% of portfolio value over 90 days.

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

Preformed Line Products  vs.  Moog Inc

Preformed Line Products

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Preformed Line Products has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Preformed Line is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Moog Inc

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Moog Inc are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. 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.

Pair Trading with Preformed Line and Moog

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

The idea behind Preformed Line Products and Moog Inc 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.