Correlation Between Timken and Moog

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

Diversification Opportunities for Timken and Moog

0.36
  Correlation Coefficient

Weak diversification

The 3 months correlation between Timken and Moog is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Timken Company and Moog Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Moog Inc and Timken 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 Timken Company 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 Timken i.e., Timken and Moog go up and down completely randomly.

Pair Corralation between Timken and Moog

Considering the 90-day investment horizon Timken Company is expected to under-perform the Moog. In addition to that, Timken is 1.32 times more volatile than Moog Inc. It trades about -0.13 of its total potential returns per unit of risk. Moog Inc is currently generating about -0.14 per unit of volatility. If you would invest  7,498  in Moog Inc on July 2, 2022 and sell it today you would lose (373.00)  from holding Moog Inc or give up 4.97% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy95.45%
ValuesDaily Returns

Timken Company  vs.  Moog Inc

 Performance (%) 
       Timeline  
Timken Company 
Timken Performance
7 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Timken Company are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Even with relatively conflicting forward-looking signals, Timken may actually be approaching a critical reversion point that can send shares even higher in October 2022.

Timken Price Channel

Moog Inc 
Moog Performance
0 of 100
Over the last 90 days Moog Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Moog Price Channel

Timken and Moog Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Timken and Moog

The main advantage of trading using opposite Timken and Moog positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Timken 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.
Timken vs. Amazon Inc
The idea behind Timken Company 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.
Moog vs. Amazon Inc
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.

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