Correlation Between Marvell Technology and General Dynamics
Can any of the company-specific risk be diversified away by investing in both Marvell Technology and General Dynamics 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 Marvell Technology and General Dynamics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Marvell Technology and General Dynamics, you can compare the effects of market volatilities on Marvell Technology and General Dynamics 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 Marvell Technology with a short position of General Dynamics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Marvell Technology and General Dynamics.
Diversification Opportunities for Marvell Technology and General Dynamics
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Marvell and General is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Marvell Technology and General Dynamics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on General Dynamics and Marvell Technology 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 Marvell Technology are associated (or correlated) with General Dynamics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of General Dynamics has no effect on the direction of Marvell Technology i.e., Marvell Technology and General Dynamics go up and down completely randomly.
Pair Corralation between Marvell Technology and General Dynamics
Assuming the 90 days trading horizon Marvell Technology is expected to generate 2.12 times more return on investment than General Dynamics. However, Marvell Technology is 2.12 times more volatile than General Dynamics. It trades about 0.07 of its potential returns per unit of risk. General Dynamics is currently generating about 0.04 per unit of risk. If you would invest 2,177 in Marvell Technology on August 30, 2024 and sell it today you would earn a total of 3,103 from holding Marvell Technology or generate 142.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 91.94% |
| Values | Daily Returns |
Marvell Technology vs. General Dynamics
Performance |
| Timeline |
| Marvell Technology |
| General Dynamics |
Marvell Technology and General Dynamics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Marvell Technology and General Dynamics
The main advantage of trading using opposite Marvell Technology and General Dynamics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Marvell Technology position performs unexpectedly, General Dynamics 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 General Dynamics will offset losses from the drop in General Dynamics' long position.| Marvell Technology vs. Metalurgica Gerdau SA | Marvell Technology vs. Deutsche Bank Aktiengesellschaft | Marvell Technology vs. Credit Acceptance | Marvell Technology vs. The Trade Desk |
| General Dynamics vs. Paycom Software | General Dynamics vs. Delta Air Lines | General Dynamics vs. Apartment Investment and | General Dynamics vs. Automatic Data Processing |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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