Correlation Between General Dynamics and Cadre Holdings
Can any of the company-specific risk be diversified away by investing in both General Dynamics and Cadre Holdings 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 Cadre Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Dynamics and Cadre Holdings, you can compare the effects of market volatilities on General Dynamics and Cadre Holdings 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 Cadre Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of General Dynamics and Cadre Holdings.
Diversification Opportunities for General Dynamics and Cadre Holdings
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between General and Cadre is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding General Dynamics and Cadre Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cadre Holdings 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 Cadre Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cadre Holdings has no effect on the direction of General Dynamics i.e., General Dynamics and Cadre Holdings go up and down completely randomly.
Pair Corralation between General Dynamics and Cadre Holdings
Allowing for the 90-day total investment horizon General Dynamics is expected to generate 0.62 times more return on investment than Cadre Holdings. However, General Dynamics is 1.61 times less risky than Cadre Holdings. It trades about -0.09 of its potential returns per unit of risk. Cadre Holdings is currently generating about -0.1 per unit of risk. If you would invest 30,075 in General Dynamics on August 30, 2024 and sell it today you would lose (1,844) from holding General Dynamics or give up 6.13% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
General Dynamics vs. Cadre Holdings
Performance |
| Timeline |
| General Dynamics |
| Cadre Holdings |
General Dynamics and Cadre Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with General Dynamics and Cadre Holdings
The main advantage of trading using opposite General Dynamics and Cadre Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if General Dynamics position performs unexpectedly, Cadre Holdings 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 Cadre Holdings will offset losses from the drop in Cadre Holdings' long position.| General Dynamics vs. Lockheed Martin | General Dynamics vs. Raytheon Technologies Corp | General Dynamics vs. L3Harris Technologies | General Dynamics vs. Huntington Ingalls Industries |
| Cadre Holdings vs. European Wax Center | Cadre Holdings vs. Enfusion | Cadre Holdings vs. CiT Inc | Cadre Holdings vs. Core Main |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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