Correlation Between Triumph and General Dynamics

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

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

Diversification Opportunities for Triumph and General Dynamics

-0.44

Correlation Coefficient

Triumph  General Dynamics

Very good diversification

The 3 months correlation between Triumph and General is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Triumph Group and General Dynamics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on General Dynamics and Triumph 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 Triumph Group 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 Triumph i.e., Triumph and General Dynamics go up and down completely randomly.

Pair Corralation between Triumph and General Dynamics

Considering the 90-day investment horizon Triumph Group is expected to generate 3.04 times more return on investment than General Dynamics. However, Triumph is 3.04 times more volatile than General Dynamics. It trades about 0.15 of its potential returns per unit of risk. General Dynamics is currently generating about -0.03 per unit of risk. If you would invest  1,356  in Triumph Group on September 1, 2024 and sell it today you would earn a total of  569.00  from holding Triumph Group or generate 41.96% return on investment over 90 days.

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

Triumph Group  vs.  General Dynamics

Triumph Group

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Triumph Group are ranked lower than 11 (%) 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.

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 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 Triumph and General Dynamics

The main advantage of trading using opposite Triumph and General Dynamics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Triumph 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 Triumph Group 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.