Correlation Between Capital Southwest and GE Vernova
Can any of the company-specific risk be diversified away by investing in both Capital Southwest and GE Vernova 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 Capital Southwest and GE Vernova into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Capital Southwest and GE Vernova LLC, you can compare the effects of market volatilities on Capital Southwest and GE Vernova 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 Capital Southwest with a short position of GE Vernova. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capital Southwest and GE Vernova.
Diversification Opportunities for Capital Southwest and GE Vernova
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Capital and GEV is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Capital Southwest and GE Vernova LLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GE Vernova LLC and Capital Southwest 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 Capital Southwest are associated (or correlated) with GE Vernova. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GE Vernova LLC has no effect on the direction of Capital Southwest i.e., Capital Southwest and GE Vernova go up and down completely randomly.
Pair Corralation between Capital Southwest and GE Vernova
Assuming the 90 days horizon Capital Southwest is expected to generate 71.76 times less return on investment than GE Vernova. But when comparing it to its historical volatility, Capital Southwest is 8.61 times less risky than GE Vernova. It trades about 0.03 of its potential returns per unit of risk. GE Vernova LLC is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest 27,988 in GE Vernova LLC on August 24, 2024 and sell it today you would earn a total of 5,997 from holding GE Vernova LLC or generate 21.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Capital Southwest vs. GE Vernova LLC
Performance |
| Timeline |
| Capital Southwest |
| GE Vernova LLC |
Capital Southwest and GE Vernova Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Capital Southwest and GE Vernova
The main advantage of trading using opposite Capital Southwest and GE Vernova positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capital Southwest position performs unexpectedly, GE Vernova 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 GE Vernova will offset losses from the drop in GE Vernova's long position.| Capital Southwest vs. Precision Drilling | Capital Southwest vs. Canlan Ice Sports | Capital Southwest vs. Stepan Company | Capital Southwest vs. Lindblad Expeditions Holdings |
| GE Vernova vs. NETGEAR | GE Vernova vs. Sphere Entertainment Co | GE Vernova vs. Merit Medical Systems | GE Vernova vs. US Global Investors |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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