Correlation Between General Dynamics and Brookfield Business

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

Diversification Opportunities for General Dynamics and Brookfield Business

0.3
  Correlation Coefficient

Weak diversification

The 3 months correlation between General and Brookfield is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding General Dynamics and Brookfield Business Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brookfield Business 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 Brookfield Business. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brookfield Business has no effect on the direction of General Dynamics i.e., General Dynamics and Brookfield Business go up and down completely randomly.

Pair Corralation between General Dynamics and Brookfield Business

If you would invest  1,865  in Brookfield Business Partners on March 18, 2024 and sell it today you would earn a total of  0.00  from holding Brookfield Business Partners or generate 0.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy9.09%
ValuesDaily Returns

General Dynamics  vs.  Brookfield Business Partners

 Performance 
       Timeline  
General Dynamics 

Risk-Adjusted Performance

10 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in General Dynamics are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak fundamental indicators, General Dynamics may actually be approaching a critical reversion point that can send shares even higher in July 2024.
Brookfield Business 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Brookfield Business Partners has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable fundamental drivers, Brookfield Business is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

General Dynamics and Brookfield Business Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with General Dynamics and Brookfield Business

The main advantage of trading using opposite General Dynamics and Brookfield Business positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if General Dynamics position performs unexpectedly, Brookfield Business 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 Brookfield Business will offset losses from the drop in Brookfield Business' long position.
The idea behind General Dynamics and Brookfield Business Partners 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 the Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.

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