Correlation Between VirTra and General Dynamics

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

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

Diversification Opportunities for VirTra and General Dynamics

-0.17

Correlation Coefficient

VirTra  General Dynamics

Good diversification

The 3 months correlation between VirTra and General is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding VirTra Inc and General Dynamics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on General Dynamics and VirTra 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 VirTra Inc 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 VirTra i.e., VirTra and General Dynamics go up and down completely randomly.

Pair Corralation between VirTra and General Dynamics

Given the investment horizon of 90 days VirTra Inc is expected to under-perform the General Dynamics. In addition to that, VirTra is 2.31 times more volatile than General Dynamics. It trades about -0.2 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  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	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

VirTra Inc  vs.  General Dynamics

VirTra Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days VirTra Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

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.

Pair Trading with VirTra and General Dynamics

The main advantage of trading using opposite VirTra and General Dynamics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VirTra 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 VirTra Inc 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.