Correlation Between Safran SA and Moog

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

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

Diversification Opportunities for Safran SA and Moog

0.11

Correlation Coefficient

Safran SA  Moog

Average diversification

The 3 months correlation between Safran and Moog is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Safran SA and Moog Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Moog Inc and Safran SA 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 Safran SA 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 Safran SA i.e., Safran SA and Moog go up and down completely randomly.

Pair Corralation between Safran SA and Moog

Assuming the 90 days horizon Safran SA is expected to under-perform the Moog. But the pink sheet apears to be less risky and, when comparing its historical volatility, Safran SA is 1.01 times less risky than Moog. The pink sheet trades about -0.03 of its potential returns per unit of risk. The Moog Inc is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  19,829  in Moog Inc on September 30, 2024 and sell it today you would lose (842.00) from holding Moog Inc or give up 4.25% of portfolio value over 90 days.

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

Safran SA  vs.  Moog Inc

Safran SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Safran SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Safran SA is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

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.

Pair Trading with Safran SA and Moog

The main advantage of trading using opposite Safran SA and Moog positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Safran SA 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 Safran SA 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.