Correlation Between General Dynamics and Nextracker
Can any of the company-specific risk be diversified away by investing in both General Dynamics and Nextracker 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 Nextracker into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Dynamics and Nextracker Class A, you can compare the effects of market volatilities on General Dynamics and Nextracker 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 Nextracker. Check out your portfolio center. Please also check ongoing floating volatility patterns of General Dynamics and Nextracker.
Diversification Opportunities for General Dynamics and Nextracker
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between General and Nextracker is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding General Dynamics and Nextracker Class A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nextracker Class A 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 Nextracker. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nextracker Class A has no effect on the direction of General Dynamics i.e., General Dynamics and Nextracker go up and down completely randomly.
Pair Corralation between General Dynamics and Nextracker
Allowing for the 90-day total investment horizon General Dynamics is expected to under-perform the Nextracker. But the stock apears to be less risky and, when comparing its historical volatility, General Dynamics is 3.03 times less risky than Nextracker. The stock trades about -0.08 of its potential returns per unit of risk. The Nextracker Class A is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 3,723 in Nextracker Class A on November 2, 2024 and sell it today you would earn a total of 1,328 from holding Nextracker Class A or generate 35.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 98.1% |
| Values | Daily Returns |
General Dynamics vs. Nextracker Class A
Performance |
| Timeline |
| General Dynamics |
| Nextracker Class A |
General Dynamics and Nextracker Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with General Dynamics and Nextracker
The main advantage of trading using opposite General Dynamics and Nextracker positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if General Dynamics position performs unexpectedly, Nextracker 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 Nextracker will offset losses from the drop in Nextracker'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 |
| Nextracker vs. Axalta Coating Systems | Nextracker vs. Keurig Dr Pepper | Nextracker vs. Albemarle | Nextracker vs. Oatly Group AB |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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