Correlation Between General Dynamics and Grupo Carso

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

By analyzing existing cross correlation between General Dynamics and Grupo Carso SAB, you can compare the effects of market volatilities on General Dynamics and Grupo Carso 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 General Dynamics with a short position of Grupo Carso. Check out your portfolio center. Please also check ongoing floating volatility patterns of General Dynamics and Grupo Carso.

Diversification Opportunities for General Dynamics and Grupo Carso

-0.04

Correlation Coefficient

General Dynamics  Grupo Carso

Good diversification

The 3 months correlation between General and Grupo is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding General Dynamics and Grupo Carso SAB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grupo Carso SAB and General Dynamics 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 General Dynamics are associated (or correlated) with Grupo Carso. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grupo Carso SAB has no effect on the direction of General Dynamics i.e., General Dynamics and Grupo Carso go up and down completely randomly.

Pair Corralation between General Dynamics and Grupo Carso

Assuming the 90 days horizon General Dynamics is expected to generate 0.47 times more return on investment than Grupo Carso. However, General Dynamics is 2.12 times less risky than Grupo Carso. It trades about 0.08 of its potential returns per unit of risk. Grupo Carso SAB is currently generating about -0.06 per unit of risk. If you would invest  428,515  in General Dynamics on September 17, 2024 and sell it today you would earn a total of  101,947  from holding General Dynamics or generate 23.79% return on investment over 90 days.

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

General Dynamics  vs.  Grupo Carso SAB

General Dynamics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days General Dynamics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's primary indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Grupo Carso SAB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Grupo Carso SAB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Grupo Carso is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with General Dynamics and Grupo Carso

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

The idea behind General Dynamics and Grupo Carso SAB 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.