Correlation Between General Dynamics and Spire Global

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

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

Diversification Opportunities for General Dynamics and Spire Global

0.03

Correlation Coefficient

General Dynamics  Spire Global

Significant diversification

The 3 months correlation between General and Spire is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding General Dynamics and Spire Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spire Global 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 Spire Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Spire Global has no effect on the direction of General Dynamics i.e., General Dynamics and Spire Global go up and down completely randomly.

Pair Corralation between General Dynamics and Spire Global

Allowing for the 90-day total investment horizon General Dynamics is expected to generate 0.17 times more return on investment than Spire Global. However, General Dynamics is 6.0 times less risky than Spire Global. It trades about 0.04 of its potential returns per unit of risk. Spire Global is currently generating about -0.05 per unit of risk. If you would invest  26,199  in General Dynamics on December 28, 2024 and sell it today you would earn a total of  750.00  from holding General Dynamics or generate 2.86% return on investment over 90 days.

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

General Dynamics  vs.  Spire Global

General Dynamics

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in General Dynamics are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental indicators, General Dynamics is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Spire Global

Risk-Adjusted Performance

Very Weak

Over the last 90 days Spire Global has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unfluctuating performance in the last few months, the Stock's forward indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with General Dynamics and Spire Global

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

The idea behind General Dynamics and Spire Global 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.