Correlation Between GE Aerospace and Appen
Can any of the company-specific risk be diversified away by investing in both GE Aerospace and Appen 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 Appen into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GE Aerospace and Appen Limited, you can compare the effects of market volatilities on GE Aerospace and Appen 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 Appen. Check out your portfolio center. Please also check ongoing floating volatility patterns of GE Aerospace and Appen.
Diversification Opportunities for GE Aerospace and Appen
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between GE Aerospace and Appen is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding GE Aerospace and Appen Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Appen Limited 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 Appen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Appen Limited has no effect on the direction of GE Aerospace i.e., GE Aerospace and Appen go up and down completely randomly.
Pair Corralation between GE Aerospace and Appen
Allowing for the 90-day total investment horizon GE Aerospace is expected to generate 7.38 times less return on investment than Appen. But when comparing it to its historical volatility, GE Aerospace is 5.87 times less risky than Appen. It trades about 0.1 of its potential returns per unit of risk. Appen Limited is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 68.00 in Appen Limited on August 28, 2024 and sell it today you would earn a total of 11.00 from holding Appen Limited or generate 16.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
GE Aerospace vs. Appen Limited
Performance |
| Timeline |
| GE Aerospace |
| Appen Limited |
GE Aerospace and Appen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GE Aerospace and Appen
The main advantage of trading using opposite GE Aerospace and Appen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GE Aerospace position performs unexpectedly, Appen 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 Appen will offset losses from the drop in Appen's long position.| GE Aerospace vs. Illinois Tool Works | GE Aerospace vs. Dover | GE Aerospace vs. Cummins | GE Aerospace vs. Eaton PLC |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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