Correlation Between General Dynamics and Dow Jones
Can any of the company-specific risk be diversified away by investing in both General Dynamics and Dow Jones 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 Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Dynamics and Dow Jones Industrial, you can compare the effects of market volatilities on General Dynamics and Dow Jones 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 Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of General Dynamics and Dow Jones.
Diversification Opportunities for General Dynamics and Dow Jones
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between General and Dow is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding General Dynamics and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial 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 Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of General Dynamics i.e., General Dynamics and Dow Jones go up and down completely randomly.
Pair Corralation between General Dynamics and Dow Jones
Allowing for the 90-day total investment horizon General Dynamics is expected to under-perform the Dow Jones. In addition to that, General Dynamics is 2.09 times more volatile than Dow Jones Industrial. It trades about -0.16 of its total potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.22 per unit of volatility. If you would invest 4,238,757 in Dow Jones Industrial on August 27, 2024 and sell it today you would earn a total of 190,894 from holding Dow Jones Industrial or generate 4.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
General Dynamics vs. Dow Jones Industrial
Performance |
| Timeline |
General Dynamics and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
General Dynamics
Pair trading matchups for General Dynamics
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with General Dynamics and Dow Jones
The main advantage of trading using opposite General Dynamics and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if General Dynamics position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' long position.| General Dynamics vs. Redwire Corp | General Dynamics vs. Sidus Space | General Dynamics vs. Rocket Lab USA | General Dynamics vs. Momentus |
| Dow Jones vs. Meiwu Technology Co | Dow Jones vs. 17 Education Technology | Dow Jones vs. 51Talk Online Education | Dow Jones vs. Afya |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
Other Complementary Tools
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets |