Correlation Between GE Aerospace and Horizon Active
Can any of the company-specific risk be diversified away by investing in both GE Aerospace and Horizon Active 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 GE Aerospace and Horizon Active into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GE Aerospace and Horizon Active Risk, you can compare the effects of market volatilities on GE Aerospace and Horizon Active 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 GE Aerospace with a short position of Horizon Active. Check out your portfolio center. Please also check ongoing floating volatility patterns of GE Aerospace and Horizon Active.
Diversification Opportunities for GE Aerospace and Horizon Active
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between GE Aerospace and Horizon is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding GE Aerospace and Horizon Active Risk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Horizon Active Risk and GE Aerospace 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 GE Aerospace are associated (or correlated) with Horizon Active. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Horizon Active Risk has no effect on the direction of GE Aerospace i.e., GE Aerospace and Horizon Active go up and down completely randomly.
Pair Corralation between GE Aerospace and Horizon Active
Allowing for the 90-day total investment horizon GE Aerospace is expected to generate 2.47 times more return on investment than Horizon Active. However, GE Aerospace is 2.47 times more volatile than Horizon Active Risk. It trades about 0.15 of its potential returns per unit of risk. Horizon Active Risk is currently generating about 0.12 per unit of risk. If you would invest 9,433 in GE Aerospace on August 24, 2024 and sell it today you would earn a total of 8,587 from holding GE Aerospace or generate 91.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
GE Aerospace vs. Horizon Active Risk
Performance |
| Timeline |
| GE Aerospace |
| Horizon Active Risk |
GE Aerospace and Horizon Active Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GE Aerospace and Horizon Active
The main advantage of trading using opposite GE Aerospace and Horizon Active positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GE Aerospace position performs unexpectedly, Horizon Active 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 Horizon Active will offset losses from the drop in Horizon Active's long position.| GE Aerospace vs. Illinois Tool Works | GE Aerospace vs. Dover | GE Aerospace vs. Cummins | GE Aerospace vs. Eaton PLC |
| Horizon Active vs. Prudential Core Conservative | Horizon Active vs. Conservative Balanced Allocation | Horizon Active vs. Pioneer Diversified High | Horizon Active vs. Massmutual Premier Diversified |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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