Correlation Between General Dynamics and DevvStream Corp

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

Diversification Opportunities for General Dynamics and DevvStream Corp

0.63
  Correlation Coefficient

Poor diversification

The 3 months correlation between General and DevvStream is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding General Dynamics and DevvStream Corp Common in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DevvStream Corp Common 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 DevvStream Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DevvStream Corp Common has no effect on the direction of General Dynamics i.e., General Dynamics and DevvStream Corp go up and down completely randomly.

Pair Corralation between General Dynamics and DevvStream Corp

Allowing for the 90-day total investment horizon General Dynamics is expected to generate 0.15 times more return on investment than DevvStream Corp. However, General Dynamics is 6.58 times less risky than DevvStream Corp. It trades about 0.02 of its potential returns per unit of risk. DevvStream Corp Common is currently generating about -0.02 per unit of risk. If you would invest  23,867  in General Dynamics on September 19, 2024 and sell it today you would earn a total of  2,360  from holding General Dynamics or generate 9.89% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

General Dynamics  vs.  DevvStream Corp Common

 Performance 
       Timeline  
General Dynamics 

Risk-Adjusted Performance

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Over the last 90 days General Dynamics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's fundamental indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.
DevvStream Corp Common 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days DevvStream Corp Common has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

General Dynamics and DevvStream Corp Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with General Dynamics and DevvStream Corp

The main advantage of trading using opposite General Dynamics and DevvStream Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if General Dynamics position performs unexpectedly, DevvStream Corp 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 DevvStream Corp will offset losses from the drop in DevvStream Corp's long position.
The idea behind General Dynamics and DevvStream Corp Common 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.
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.

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