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 The Boeing, 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
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between General and Boeing is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding General Dynamics and The Boeing 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
Assuming the 90 days horizon General Dynamics is expected to generate 0.64 times more return on investment than Boeing. However, General Dynamics is 1.57 times less risky than Boeing. It trades about 0.04 of its potential returns per unit of risk. The Boeing is currently generating about -0.07 per unit of risk. If you would invest 22,535 in General Dynamics on September 14, 2024 and sell it today you would earn a total of 2,725 from holding General Dynamics or generate 12.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
General Dynamics vs. The Boeing
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. Airbus SE | General Dynamics vs. Superior Plus Corp | General Dynamics vs. Origin Agritech | General Dynamics vs. INTUITIVE SURGICAL |
| Boeing vs. Highlight Communications AG | Boeing vs. T MOBILE US | Boeing vs. Tower One Wireless | Boeing vs. Eagle Materials |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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