Correlation Between General Dynamics and Orbital ATK

Can any of the company-specific risk be diversified away by investing in both General Dynamics and Orbital ATK 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 Orbital ATK into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between General Dynamics and Orbital ATK, you can compare the effects of market volatilities on General Dynamics and Orbital ATK 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 Orbital ATK. Check out your portfolio center. Please also check ongoing floating volatility patterns of General Dynamics and Orbital ATK.

Diversification Opportunities for General Dynamics and Orbital ATK

0.0

Correlation Coefficient

General Dynamics  Orbital ATK

Pay attention - limited upside

The 3 months correlation between General and Orbital is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding General Dynamics and Orbital ATK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Orbital ATK 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 Orbital ATK. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Orbital ATK has no effect on the direction of General Dynamics i.e., General Dynamics and Orbital ATK go up and down completely randomly.

Pair Corralation between General Dynamics and Orbital ATK

If you would invest  25,990  in General Dynamics on January 24, 2024 and sell it today you would earn a total of  3,141  from holding General Dynamics or generate 12.09% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

General Dynamics  vs.  Orbital ATK

General Dynamics

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in General Dynamics are ranked lower than 19 (%) 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 May 2024.

Orbital ATK

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Orbital ATK has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Orbital ATK is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with General Dynamics and Orbital ATK

The main advantage of trading using opposite General Dynamics and Orbital ATK positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if General Dynamics position performs unexpectedly, Orbital ATK 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 Orbital ATK will offset losses from the drop in Orbital ATK's long position.

The idea behind General Dynamics and Orbital ATK 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.

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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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.