Correlation Between General Dynamics and Triumph

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

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

Diversification Opportunities for General Dynamics and Triumph

-0.27

Correlation Coefficient

General Dynamics  Triumph

Very good diversification

The 3 months correlation between General and Triumph is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding General Dynamics and Triumph Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Triumph Group 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 Triumph. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Triumph Group has no effect on the direction of General Dynamics i.e., General Dynamics and Triumph go up and down completely randomly.

Pair Corralation between General Dynamics and Triumph

Allowing for the 90-day total investment horizon General Dynamics is expected to generate 10.95 times less return on investment than Triumph. But when comparing it to its historical volatility, General Dynamics is 3.09 times less risky than Triumph. It trades about 0.04 of its potential returns per unit of risk. Triumph Group is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  1,865  in Triumph Group on December 28, 2024 and sell it today you would earn a total of  678.00  from holding Triumph Group or generate 36.35% return on investment over 90 days.

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

General Dynamics  vs.  Triumph Group

General Dynamics

Risk-Adjusted Performance

Insignificant

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 latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Triumph Group

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Triumph Group are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak technical and fundamental indicators, Triumph demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with General Dynamics and Triumph

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

The idea behind General Dynamics and Triumph Group 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 Stocks Directory module to find actively traded stocks across global markets.