Correlation Between A2Z SMART and General Dynamics

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Can any of the company-specific risk be diversified away by investing in both A2Z SMART 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 A2Z SMART and General Dynamics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between A2Z SMART TECHNOLOGIES and General Dynamics Corp, you can compare the effects of market volatilities on A2Z SMART 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 A2Z SMART with a short position of General Dynamics. Check out your portfolio center. Please also check ongoing floating volatility patterns of A2Z SMART and General Dynamics.

Diversification Opportunities for A2Z SMART and General Dynamics

0.0
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between AAZZF and General is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding A2Z SMART TECHNOLOGIES CORP 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 A2Z SMART 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 A2Z SMART TECHNOLOGIES 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 A2Z SMART i.e., A2Z SMART and General Dynamics go up and down completely randomly.

Pair Corralation between A2Z SMART and General Dynamics

If you would invest  0.00  in A2Z SMART TECHNOLOGIES on February 22, 2022 and sell it today you would earn a total of  0.00  from holding A2Z SMART TECHNOLOGIES or generate 0.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy4.76%
ValuesDaily Returns

A2Z SMART TECHNOLOGIES CORP  vs.  General Dynamics Corp

 Performance (%) 
      Timeline 
A2Z SMART TECHNOLOGIES 
AAZZF Performance
0 of 100
Over the last 90 days A2Z SMART TECHNOLOGIES has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, A2Z SMART is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.
General Dynamics Corp 
General Performance
0 of 100
Over the last 90 days General Dynamics Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, General Dynamics is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

General Price Channel

A2Z SMART and General Dynamics Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with A2Z SMART and General Dynamics

The main advantage of trading using opposite A2Z SMART and General Dynamics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if A2Z SMART 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.

A2Z SMART TECHNOLOGIES

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The effect of pair diversification on risk is to reduce it, but we should note this doesn't apply to all risk types. When we trade pairs against A2Z SMART as a counterpart, there is always some inherent risk that will never be diversified away no matter what. This volatility limits the effect of tactical diversification using pair trading. A2Z SMART's systematic risk is the inherent uncertainty of the entire market, and therefore cannot be mitigated even by pair-trading it against the equity that is not highly correlated to it. On the other hand, A2Z SMART's unsystematic risk describes the types of risk that we can protect against, at least to some degree, by selecting a matching pair that is not perfectly correlated to A2Z SMART TECHNOLOGIES.
The idea behind A2Z SMART TECHNOLOGIES and General Dynamics Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.

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