Correlation Between General Dynamics and Boeing
Can any of the company-specific risk be diversified away by investing in both General Dynamics and Boeing 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 Boeing into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Dynamics and Boeing Co, you can compare the effects of market volatilities on General Dynamics and Boeing 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 Boeing. Check out your portfolio center. Please also check ongoing floating volatility patterns of General Dynamics and Boeing.
Diversification Opportunities for General Dynamics and Boeing
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between General and Boeing is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding General Dynamics and Boeing Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boeing 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 are associated (or correlated) with Boeing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Boeing has no effect on the direction of General Dynamics i.e., General Dynamics and Boeing go up and down completely randomly.
Pair Corralation between General Dynamics and Boeing
Allowing for the 90-day total investment horizon General Dynamics is expected to under-perform the Boeing. In addition to that, General Dynamics is 1.21 times more volatile than Boeing Co. It trades about -0.14 of its total potential returns per unit of risk. Boeing Co is currently generating about -0.03 per unit of volatility. If you would invest 5,415 in Boeing Co on August 25, 2024 and sell it today you would lose (70.00) from holding Boeing Co or give up 1.29% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 86.36% |
| Values | Daily Returns |
General Dynamics vs. Boeing Co
Performance |
| Timeline |
| General Dynamics |
| Boeing |
General Dynamics and Boeing Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with General Dynamics and Boeing
The main advantage of trading using opposite General Dynamics and Boeing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if General Dynamics position performs unexpectedly, Boeing 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 Boeing will offset losses from the drop in Boeing's long position.| 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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