Correlation Between General Dynamics and Innovative SolSup

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

Diversification Opportunities for General Dynamics and Innovative SolSup

0.29
  Correlation Coefficient

Modest diversification

The 3 months correlation between General and Innovative is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding General Dynamics Corp and Innovative SolSup in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Innovative SolSup and General Dynamics 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 General Dynamics Corp are associated (or correlated) with Innovative SolSup. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Innovative SolSup has no effect on the direction of General Dynamics i.e., General Dynamics and Innovative SolSup go up and down completely randomly.

Pair Corralation between General Dynamics and Innovative SolSup

Allowing for the 90-day total investment horizon General Dynamics Corp is expected to generate 0.34 times more return on investment than Innovative SolSup. However, General Dynamics Corp is 2.92 times less risky than Innovative SolSup. It trades about 0.26 of its potential returns per unit of risk. Innovative SolSup is currently generating about -0.05 per unit of risk. If you would invest  21,663  in General Dynamics Corp on May 13, 2022 and sell it today you would earn a total of  1,383  from holding General Dynamics Corp or generate 6.38% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

General Dynamics Corp  vs.  Innovative SolSup

 Performance (%) 
       Timeline  
General Dynamics Corp 
General Performance
2 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in General Dynamics Corp 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 current stock price tumult, may contribute to shorter-term losses for the shareholders.

General Price Channel

Innovative SolSup 
Innovative Performance
0 of 100
Over the last 90 days Innovative SolSup 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 somewhat strong which may send shares a bit higher in September 2022. The current disturbance may also be a sign of long term up-swing for the company investors.

Innovative Price Channel

General Dynamics and Innovative SolSup Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with General Dynamics and Innovative SolSup

The main advantage of trading using opposite General Dynamics and Innovative SolSup positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if General Dynamics position performs unexpectedly, Innovative SolSup 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 Innovative SolSup will offset losses from the drop in Innovative SolSup's long position.
The idea behind General Dynamics Corp and Innovative SolSup 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 Shere Portfolio module to track or share privately all of your investments from the convenience of any device.

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