Correlation Between CPI Aerostructures and General Dynamics
Can any of the company-specific risk be diversified away by investing in both CPI Aerostructures 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 CPI Aerostructures and General Dynamics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CPI Aerostructures and General Dynamics, you can compare the effects of market volatilities on CPI Aerostructures 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 CPI Aerostructures with a short position of General Dynamics. Check out your portfolio center. Please also check ongoing floating volatility patterns of CPI Aerostructures and General Dynamics.
Diversification Opportunities for CPI Aerostructures and General Dynamics
-0.76 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between CPI and General is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding CPI Aerostructures and General Dynamics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on General Dynamics and CPI Aerostructures 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 CPI Aerostructures 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 CPI Aerostructures i.e., CPI Aerostructures and General Dynamics go up and down completely randomly.
Pair Corralation between CPI Aerostructures and General Dynamics
Considering the 90-day investment horizon CPI Aerostructures is expected to generate 5.44 times more return on investment than General Dynamics. However, CPI Aerostructures is 5.44 times more volatile than General Dynamics. It trades about 0.3 of its potential returns per unit of risk. General Dynamics is currently generating about 0.18 per unit of risk. If you would invest 385.00 in CPI Aerostructures on October 20, 2024 and sell it today you would earn a total of 114.00 from holding CPI Aerostructures or generate 29.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CPI Aerostructures vs. General Dynamics
Performance |
| Timeline |
| CPI Aerostructures |
| General Dynamics |
CPI Aerostructures and General Dynamics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CPI Aerostructures and General Dynamics
The main advantage of trading using opposite CPI Aerostructures and General Dynamics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CPI Aerostructures 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.| CPI Aerostructures vs. Ducommun Incorporated | CPI Aerostructures vs. SIFCO Industries | CPI Aerostructures vs. Innovative Solutions and | CPI Aerostructures vs. Air Industries Group |
| General Dynamics vs. Lockheed Martin | General Dynamics vs. Raytheon Technologies Corp | General Dynamics vs. L3Harris Technologies | General Dynamics vs. Huntington Ingalls Industries |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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