Correlation Between GE Aerospace and Amerigo Resources
Can any of the company-specific risk be diversified away by investing in both GE Aerospace and Amerigo Resources 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 Amerigo Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GE Aerospace and Amerigo Resources, you can compare the effects of market volatilities on GE Aerospace and Amerigo Resources 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 Amerigo Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of GE Aerospace and Amerigo Resources.
Diversification Opportunities for GE Aerospace and Amerigo Resources
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between GE Aerospace and Amerigo is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding GE Aerospace and Amerigo Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amerigo Resources 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 Amerigo Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amerigo Resources has no effect on the direction of GE Aerospace i.e., GE Aerospace and Amerigo Resources go up and down completely randomly.
Pair Corralation between GE Aerospace and Amerigo Resources
Allowing for the 90-day total investment horizon GE Aerospace is expected to generate 0.68 times more return on investment than Amerigo Resources. However, GE Aerospace is 1.48 times less risky than Amerigo Resources. It trades about 0.13 of its potential returns per unit of risk. Amerigo Resources is currently generating about 0.03 per unit of risk. If you would invest 7,998 in GE Aerospace on August 29, 2024 and sell it today you would earn a total of 10,462 from holding GE Aerospace or generate 130.81% 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. Amerigo Resources
Performance |
| Timeline |
| GE Aerospace |
| Amerigo Resources |
GE Aerospace and Amerigo Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GE Aerospace and Amerigo Resources
The main advantage of trading using opposite GE Aerospace and Amerigo Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GE Aerospace position performs unexpectedly, Amerigo Resources 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 Amerigo Resources will offset losses from the drop in Amerigo Resources' long position.| GE Aerospace vs. Illinois Tool Works | GE Aerospace vs. Dover | GE Aerospace vs. Cummins | GE Aerospace vs. Eaton PLC |
| Amerigo Resources vs. Ascendant Resources | Amerigo Resources vs. Cantex Mine Development | Amerigo Resources vs. Amarc Resources | Amerigo Resources vs. Sterling Metals Corp |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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