Correlation Between BANK CENTRAL and General Dynamics
Can any of the company-specific risk be diversified away by investing in both BANK CENTRAL 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 BANK CENTRAL and General Dynamics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BANK CENTRAL ASIA and General Dynamics, you can compare the effects of market volatilities on BANK CENTRAL 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 BANK CENTRAL with a short position of General Dynamics. Check out your portfolio center. Please also check ongoing floating volatility patterns of BANK CENTRAL and General Dynamics.
Diversification Opportunities for BANK CENTRAL and General Dynamics
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between BANK and General is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding BANK CENTRAL ASIA and General Dynamics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on General Dynamics and BANK CENTRAL 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 BANK CENTRAL ASIA 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 BANK CENTRAL i.e., BANK CENTRAL and General Dynamics go up and down completely randomly.
Pair Corralation between BANK CENTRAL and General Dynamics
Assuming the 90 days trading horizon BANK CENTRAL ASIA is expected to under-perform the General Dynamics. In addition to that, BANK CENTRAL is 1.06 times more volatile than General Dynamics. It trades about -0.22 of its total potential returns per unit of risk. General Dynamics is currently generating about -0.13 per unit of volatility. If you would invest 28,295 in General Dynamics on August 24, 2024 and sell it today you would lose (1,800) from holding General Dynamics or give up 6.36% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BANK CENTRAL ASIA vs. General Dynamics
Performance |
| Timeline |
| BANK CENTRAL ASIA |
| General Dynamics |
BANK CENTRAL and General Dynamics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BANK CENTRAL and General Dynamics
The main advantage of trading using opposite BANK CENTRAL and General Dynamics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BANK CENTRAL 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.| BANK CENTRAL vs. Apple Inc | BANK CENTRAL vs. Apple Inc | BANK CENTRAL vs. Apple Inc | BANK CENTRAL vs. Apple Inc |
| General Dynamics vs. AEON STORES | General Dynamics vs. BJs Wholesale Club | General Dynamics vs. SOUTHWEST AIRLINES | General Dynamics vs. Vastned Retail NV |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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