Correlation Between Astronics and General Dynamics

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Can any of the company-specific risk be diversified away by investing in both Astronics 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 Astronics and General Dynamics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Astronics Cp and General Dynamics Corp, you can compare the effects of market volatilities on Astronics 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 Astronics with a short position of General Dynamics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Astronics and General Dynamics.

Diversification Opportunities for Astronics and General Dynamics

0.7
  Correlation Coefficient

Poor diversification

The 3 months correlation between Astronics and General is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Astronics Cp and General Dynamics Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on General Dynamics Corp and Astronics 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 Astronics Cp 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 Corp has no effect on the direction of Astronics i.e., Astronics and General Dynamics go up and down completely randomly.

Pair Corralation between Astronics and General Dynamics

Given the investment horizon of 90 days Astronics is expected to generate 8.2 times less return on investment than General Dynamics. In addition to that, Astronics is 1.89 times more volatile than General Dynamics Corp. It trades about 0.01 of its total potential returns per unit of risk. General Dynamics Corp is currently generating about 0.09 per unit of volatility. If you would invest  20,428  in General Dynamics Corp on May 21, 2022 and sell it today you would earn a total of  3,941  from holding General Dynamics Corp or generate 19.29% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Astronics Cp  vs.  General Dynamics Corp

 Performance (%) 
       Timeline  
Astronics Cp 
Astronics Performance
9 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Astronics Cp are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, Astronics disclosed solid returns over the last few months and may actually be approaching a breakup point.

Astronics Price Channel

General Dynamics Corp 
General Performance
11 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in General Dynamics Corp are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak fundamental indicators, General Dynamics exhibited solid returns over the last few months and may actually be approaching a breakup point.

General Price Channel

Astronics and General Dynamics Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Astronics and General Dynamics

The main advantage of trading using opposite Astronics and General Dynamics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Astronics 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 Astronics Cp and General Dynamics Corp 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.

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