Correlation Between General Dynamics and SQ Old

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

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

Diversification Opportunities for General Dynamics and SQ Old

0.0

Correlation Coefficient

General Dynamics  SQ Old

Pay attention - limited upside

The 3 months correlation between General and SQ Old is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding General Dynamics and SQ Old in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SQ Old 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 SQ Old. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SQ Old has no effect on the direction of General Dynamics i.e., General Dynamics and SQ Old go up and down completely randomly.

Pair Corralation between General Dynamics and SQ Old

If you would invest  26,473  in General Dynamics on December 27, 2024 and sell it today you would earn a total of  469.00  from holding General Dynamics or generate 1.77% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

General Dynamics  vs.  SQ Old

General Dynamics

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in General Dynamics are ranked lower than 2 (%) 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.

SQ Old

Risk-Adjusted Performance

Very Weak

Over the last 90 days SQ Old has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, SQ Old is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with General Dynamics and SQ Old

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

The idea behind General Dynamics and SQ Old 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.