Correlation Between General Dynamics and Intuitive Machines

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

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

Diversification Opportunities for General Dynamics and Intuitive Machines

-0.69

Correlation Coefficient

General Dynamics  Intuitive Machines

Excellent diversification

The 3 months correlation between General and Intuitive is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding General Dynamics and Intuitive Machines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intuitive Machines 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 Intuitive Machines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intuitive Machines has no effect on the direction of General Dynamics i.e., General Dynamics and Intuitive Machines go up and down completely randomly.

Pair Corralation between General Dynamics and Intuitive Machines

Allowing for the 90-day total investment horizon General Dynamics is expected to under-perform the Intuitive Machines. But the stock apears to be less risky and, when comparing its historical volatility, General Dynamics is 6.4 times less risky than Intuitive Machines. The stock trades about -0.14 of its potential returns per unit of risk. The Intuitive Machines is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  540.00  in Intuitive Machines on September 17, 2024 and sell it today you would earn a total of  628.50  from holding Intuitive Machines or generate 116.39% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

General Dynamics  vs.  Intuitive Machines

General Dynamics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days General Dynamics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Intuitive Machines

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Intuitive Machines are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Intuitive Machines reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with General Dynamics and Intuitive Machines

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

The idea behind General Dynamics and Intuitive Machines 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.