Correlation Between Amazon and Moog

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Can any of the company-specific risk be diversified away by investing in both Amazon 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 Amazon and Moog into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amazon Inc and Moog Inc, you can compare the effects of market volatilities on Amazon 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 Amazon with a short position of Moog. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amazon and Moog.

Diversification Opportunities for Amazon and Moog

-0.64
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Amazon and Moog is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Amazon Inc and Moog Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Moog Inc and Amazon 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 Amazon Inc 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 Amazon i.e., Amazon and Moog go up and down completely randomly.

Pair Corralation between Amazon and Moog

Given the investment horizon of 90 days Amazon Inc is expected to under-perform the Moog. In addition to that, Amazon is 1.9 times more volatile than Moog Inc. It trades about -0.12 of its total potential returns per unit of risk. Moog Inc is currently generating about 0.13 per unit of volatility. If you would invest  8,415  in Moog Inc on August 29, 2022 and sell it today you would earn a total of  459.00  from holding Moog Inc or generate 5.45% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy95.45%
ValuesDaily Returns

Amazon Inc  vs.  Moog Inc

 Performance (%) 
       Timeline  
Amazon Inc 
Amazon Performance
0 of 100
Over the last 90 days Amazon Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in December 2022. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Amazon Price Channel

Moog Inc 
Moog Performance
8 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Moog Inc are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Moog sustained solid returns over the last few months and may actually be approaching a breakup point.

Moog Price Channel

Amazon and Moog Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Amazon and Moog

The main advantage of trading using opposite Amazon and Moog positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amazon 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.
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The idea behind Amazon Inc 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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Check out your portfolio center. 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.

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