Correlation Between General Dynamics and Environment

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

By analyzing existing cross correlation between General Dynamics and Environment And Alternative, you can compare the effects of market volatilities on General Dynamics and Environment 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 Environment. Check out your portfolio center. Please also check ongoing floating volatility patterns of General Dynamics and Environment.

Diversification Opportunities for General Dynamics and Environment

-0.67

Correlation Coefficient

General Dynamics  Environment

Excellent diversification

The 3 months correlation between General and Environment is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding General Dynamics and Environment And Alternative in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Environment And Alte 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 Environment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Environment And Alte has no effect on the direction of General Dynamics i.e., General Dynamics and Environment go up and down completely randomly.

Pair Corralation between General Dynamics and Environment

Allowing for the 90-day total investment horizon General Dynamics is expected to under-perform the Environment. In addition to that, General Dynamics is 1.52 times more volatile than Environment And Alternative. It trades about -0.16 of its total potential returns per unit of risk. Environment And Alternative is currently generating about 0.14 per unit of volatility. If you would invest  3,852  in Environment And Alternative on September 16, 2024 and sell it today you would earn a total of  310.00  from holding Environment And Alternative or generate 8.05% return on investment over 90 days.

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

General Dynamics  vs.  Environment And Alternative

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 weak 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.

Environment And Alte

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Environment And Alternative are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Environment may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with General Dynamics and Environment

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

The idea behind General Dynamics and Environment And Alternative 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.