Correlation Between Zegona Communications and General Dynamics
Can any of the company-specific risk be diversified away by investing in both Zegona Communications 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 Zegona Communications and General Dynamics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Zegona Communications Plc and General Dynamics Corp, you can compare the effects of market volatilities on Zegona Communications 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 Zegona Communications with a short position of General Dynamics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zegona Communications and General Dynamics.
Diversification Opportunities for Zegona Communications and General Dynamics
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Zegona and General is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Zegona Communications Plc and General Dynamics Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on General Dynamics Corp and Zegona Communications 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 Zegona Communications Plc 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 Corp has no effect on the direction of Zegona Communications i.e., Zegona Communications and General Dynamics go up and down completely randomly.
Pair Corralation between Zegona Communications and General Dynamics
Assuming the 90 days trading horizon Zegona Communications Plc is expected to generate 1.39 times more return on investment than General Dynamics. However, Zegona Communications is 1.39 times more volatile than General Dynamics Corp. It trades about 0.11 of its potential returns per unit of risk. General Dynamics Corp is currently generating about -0.43 per unit of risk. If you would invest 30,600 in Zegona Communications Plc on September 12, 2024 and sell it today you would earn a total of 1,800 from holding Zegona Communications Plc or generate 5.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Zegona Communications Plc vs. General Dynamics Corp
Performance |
| Timeline |
| Zegona Communications Plc |
| General Dynamics Corp |
Zegona Communications and General Dynamics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Zegona Communications and General Dynamics
The main advantage of trading using opposite Zegona Communications and General Dynamics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zegona Communications 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.| Zegona Communications vs. Catalyst Media Group | Zegona Communications vs. CATLIN GROUP | Zegona Communications vs. Tamburi Investment Partners | Zegona Communications vs. Magnora ASA |
| General Dynamics vs. Discover Financial Services | General Dynamics vs. United States Steel | General Dynamics vs. Cincinnati Financial Corp | General Dynamics vs. Regions Financial Corp |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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