Correlation Between Lilium Equity and General Dynamics

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

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

Diversification Opportunities for Lilium Equity and General Dynamics

0.0

Correlation Coefficient

Lilium Equity  General Dynamics

Pay attention - limited upside

The 3 months correlation between Lilium and General is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Lilium Equity Warrants and General Dynamics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on General Dynamics and Lilium Equity 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 Lilium Equity Warrants 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 Lilium Equity i.e., Lilium Equity and General Dynamics go up and down completely randomly.

Pair Corralation between Lilium Equity and General Dynamics

If you would invest  26,199  in General Dynamics on December 28, 2024 and sell it today you would earn a total of  709.00  from holding General Dynamics or generate 2.71% return on investment over 90 days.

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

Lilium Equity Warrants  vs.  General Dynamics

Lilium Equity Warrants

Risk-Adjusted Performance

Very Weak

Over the last 90 days Lilium Equity Warrants has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable primary indicators, Lilium Equity is not utilizing all of its potentials. The newest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

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

Pair Trading with Lilium Equity and General Dynamics

The main advantage of trading using opposite Lilium Equity and General Dynamics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lilium Equity 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 Lilium Equity Warrants 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.

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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.