Correlation Between General Dynamics and Vanguard Industrials
Can any of the company-specific risk be diversified away by investing in both General Dynamics and Vanguard Industrials 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 Vanguard Industrials into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Dynamics and Vanguard Industrials Index, you can compare the effects of market volatilities on General Dynamics and Vanguard Industrials 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 Vanguard Industrials. Check out your portfolio center. Please also check ongoing floating volatility patterns of General Dynamics and Vanguard Industrials.
Diversification Opportunities for General Dynamics and Vanguard Industrials
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between General and Vanguard is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding General Dynamics and Vanguard Industrials Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Industrials 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 Vanguard Industrials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Industrials has no effect on the direction of General Dynamics i.e., General Dynamics and Vanguard Industrials go up and down completely randomly.
Pair Corralation between General Dynamics and Vanguard Industrials
Allowing for the 90-day total investment horizon General Dynamics is expected to generate 1.14 times more return on investment than Vanguard Industrials. However, General Dynamics is 1.14 times more volatile than Vanguard Industrials Index. It trades about 0.05 of its potential returns per unit of risk. Vanguard Industrials Index is currently generating about 0.06 per unit of risk. If you would invest 20,669 in General Dynamics on March 24, 2025 and sell it today you would earn a total of 7,209 from holding General Dynamics or generate 34.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
General Dynamics vs. Vanguard Industrials Index
Performance |
| Timeline |
| General Dynamics |
| Vanguard Industrials |
General Dynamics and Vanguard Industrials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with General Dynamics and Vanguard Industrials
The main advantage of trading using opposite General Dynamics and Vanguard Industrials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if General Dynamics position performs unexpectedly, Vanguard Industrials 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 Vanguard Industrials will offset losses from the drop in Vanguard Industrials' long position.| General Dynamics vs. Lockheed Martin | General Dynamics vs. Raytheon Technologies Corp | General Dynamics vs. L3Harris Technologies | General Dynamics vs. Huntington Ingalls Industries |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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