Correlation Between General Dynamics and StandardAero,

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

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

Diversification Opportunities for General Dynamics and StandardAero,

0.63

Correlation Coefficient

General Dynamics  StandardAero,

Poor diversification

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

Pair Corralation between General Dynamics and StandardAero,

Allowing for the 90-day total investment horizon General Dynamics is expected to generate 0.65 times more return on investment than StandardAero,. However, General Dynamics is 1.53 times less risky than StandardAero,. It trades about -0.13 of its potential returns per unit of risk. StandardAero, is currently generating about -0.16 per unit of risk. If you would invest  29,968  in General Dynamics on October 24, 2024 and sell it today you would lose (3,301) from holding General Dynamics or give up 11.02% of portfolio value over 90 days.

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

General Dynamics  vs.  StandardAero,

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 uncertain performance, the Stock's fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

StandardAero,

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days StandardAero, 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 very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with General Dynamics and StandardAero,

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

The idea behind General Dynamics and StandardAero, 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.