Correlation Between Hoteles City and General Dynamics

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

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

Diversification Opportunities for Hoteles City and General Dynamics

0.36

Correlation Coefficient

Hoteles City  General Dynamics

Weak diversification

The 3 months correlation between Hoteles and General is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Hoteles City Express and General Dynamics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on General Dynamics and Hoteles City 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 Hoteles City Express are associated (or correlated) with General Dynamics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of General Dynamics has no effect on the direction of Hoteles City i.e., Hoteles City and General Dynamics go up and down completely randomly.

Pair Corralation between Hoteles City and General Dynamics

Assuming the 90 days trading horizon Hoteles City Express is expected to under-perform the General Dynamics. In addition to that, Hoteles City is 1.92 times more volatile than General Dynamics. It trades about -0.04 of its total potential returns per unit of risk. General Dynamics is currently generating about 0.04 per unit of volatility. If you would invest  434,351  in General Dynamics on October 13, 2024 and sell it today you would earn a total of  96,111  from holding General Dynamics or generate 22.13% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.8%
Values	Daily Returns

Hoteles City Express  vs.  General Dynamics

Hoteles City Express

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hoteles City Express 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 primary 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.

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 weak performance, the Stock's primary indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Hoteles City and General Dynamics

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

The idea behind Hoteles City Express and General Dynamics 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..