Correlation Between Mercury Systems and Textron
Can any of the company-specific risk be diversified away by investing in both Mercury Systems and Textron 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 Textron into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mercury Systems and Textron, you can compare the effects of market volatilities on Mercury Systems and Textron 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 Textron. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mercury Systems and Textron.
Diversification Opportunities for Mercury Systems and Textron
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Mercury and Textron is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Mercury Systems and Textron in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Textron 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 Textron. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Textron has no effect on the direction of Mercury Systems i.e., Mercury Systems and Textron go up and down completely randomly.
Pair Corralation between Mercury Systems and Textron
Given the investment horizon of 90 days Mercury Systems is expected to generate 0.97 times more return on investment than Textron. However, Mercury Systems is 1.03 times less risky than Textron. It trades about 0.1 of its potential returns per unit of risk. Textron is currently generating about 0.04 per unit of risk. If you would invest 4,529 in Mercury Systems on March 21, 2025 and sell it today you would earn a total of 614.00 from holding Mercury Systems or generate 13.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mercury Systems vs. Textron
Performance |
| Timeline |
| Mercury Systems |
| Textron |
Mercury Systems and Textron Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mercury Systems and Textron
The main advantage of trading using opposite Mercury Systems and Textron positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mercury Systems position performs unexpectedly, Textron 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 Textron will offset losses from the drop in Textron's long position.| Mercury Systems vs. Curtiss Wright | Mercury Systems vs. Hexcel | Mercury Systems vs. Ducommun Incorporated | Mercury Systems vs. Woodward |
| Textron vs. Hexcel | Textron vs. Huntington Ingalls Industries | Textron vs. Curtiss Wright | Textron vs. Mercury Systems |
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 the Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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