Correlation Between General Dynamics and Steel Partners
Can any of the company-specific risk be diversified away by investing in both General Dynamics and Steel Partners 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 Steel Partners into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Dynamics and Steel Partners Holdings, you can compare the effects of market volatilities on General Dynamics and Steel Partners 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 Steel Partners. Check out your portfolio center. Please also check ongoing floating volatility patterns of General Dynamics and Steel Partners.
Diversification Opportunities for General Dynamics and Steel Partners
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between General and Steel is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding General Dynamics and Steel Partners Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Steel Partners 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 Steel Partners. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Steel Partners Holdings has no effect on the direction of General Dynamics i.e., General Dynamics and Steel Partners go up and down completely randomly.
Pair Corralation between General Dynamics and Steel Partners
Allowing for the 90-day total investment horizon General Dynamics is expected to generate 0.35 times more return on investment than Steel Partners. However, General Dynamics is 2.87 times less risky than Steel Partners. It trades about -0.02 of its potential returns per unit of risk. Steel Partners Holdings is currently generating about -0.05 per unit of risk. If you would invest 25,963 in General Dynamics on November 3, 2024 and sell it today you would lose (265.00) from holding General Dynamics or give up 1.02% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
General Dynamics vs. Steel Partners Holdings
Performance |
| Timeline |
| General Dynamics |
| Steel Partners Holdings |
General Dynamics and Steel Partners Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with General Dynamics and Steel Partners
The main advantage of trading using opposite General Dynamics and Steel Partners positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if General Dynamics position performs unexpectedly, Steel Partners 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 Steel Partners will offset losses from the drop in Steel Partners' long position.| General Dynamics vs. Lockheed Martin | General Dynamics vs. Raytheon Technologies Corp | General Dynamics vs. L3Harris Technologies | General Dynamics vs. Huntington Ingalls Industries |
| Steel Partners vs. Compass Diversified | Steel Partners vs. Compass Diversified | Steel Partners vs. Compass Diversified | Steel Partners vs. Tejon Ranch Co |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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