Correlation Between GE Aerospace and Amada
Can any of the company-specific risk be diversified away by investing in both GE Aerospace and Amada 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 Amada into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GE Aerospace and Amada Co, you can compare the effects of market volatilities on GE Aerospace and Amada 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 Amada. Check out your portfolio center. Please also check ongoing floating volatility patterns of GE Aerospace and Amada.
Diversification Opportunities for GE Aerospace and Amada
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between GE Aerospace and Amada is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding GE Aerospace and Amada Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amada 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 Amada. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amada has no effect on the direction of GE Aerospace i.e., GE Aerospace and Amada go up and down completely randomly.
Pair Corralation between GE Aerospace and Amada
Allowing for the 90-day total investment horizon GE Aerospace is expected to generate 0.71 times more return on investment than Amada. However, GE Aerospace is 1.4 times less risky than Amada. It trades about 0.16 of its potential returns per unit of risk. Amada Co is currently generating about -0.22 per unit of risk. If you would invest 17,176 in GE Aerospace on September 5, 2024 and sell it today you would earn a total of 896.00 from holding GE Aerospace or generate 5.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
GE Aerospace vs. Amada Co
Performance |
| Timeline |
| GE Aerospace |
| Amada |
GE Aerospace and Amada Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GE Aerospace and Amada
The main advantage of trading using opposite GE Aerospace and Amada positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GE Aerospace position performs unexpectedly, Amada 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 Amada will offset losses from the drop in Amada's long position.| GE Aerospace vs. Illinois Tool Works | GE Aerospace vs. Dover | GE Aerospace vs. Cummins | GE Aerospace vs. Eaton PLC |
| Amada vs. Dear Cashmere Holding | Amada vs. Goff Corp | Amada vs. Wialan Technologies | Amada vs. Cgrowth Capital |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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