Correlation Between GE Aerospace and Atlas Copco
Can any of the company-specific risk be diversified away by investing in both GE Aerospace and Atlas Copco 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 Atlas Copco into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GE Aerospace and Atlas Copco AB, you can compare the effects of market volatilities on GE Aerospace and Atlas Copco 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 Atlas Copco. Check out your portfolio center. Please also check ongoing floating volatility patterns of GE Aerospace and Atlas Copco.
Diversification Opportunities for GE Aerospace and Atlas Copco
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between GE Aerospace and Atlas is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding GE Aerospace and Atlas Copco AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Atlas Copco AB 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 Atlas Copco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Atlas Copco AB has no effect on the direction of GE Aerospace i.e., GE Aerospace and Atlas Copco go up and down completely randomly.
Pair Corralation between GE Aerospace and Atlas Copco
Allowing for the 90-day total investment horizon GE Aerospace is expected to generate 0.9 times more return on investment than Atlas Copco. However, GE Aerospace is 1.12 times less risky than Atlas Copco. It trades about 0.12 of its potential returns per unit of risk. Atlas Copco AB is currently generating about 0.07 per unit of risk. If you would invest 8,884 in GE Aerospace on September 12, 2024 and sell it today you would earn a total of 8,008 from holding GE Aerospace or generate 90.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.4% |
| Values | Daily Returns |
GE Aerospace vs. Atlas Copco AB
Performance |
| Timeline |
| GE Aerospace |
| Atlas Copco AB |
GE Aerospace and Atlas Copco Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GE Aerospace and Atlas Copco
The main advantage of trading using opposite GE Aerospace and Atlas Copco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GE Aerospace position performs unexpectedly, Atlas Copco 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 Atlas Copco will offset losses from the drop in Atlas Copco's long position.| GE Aerospace vs. Victory Integrity Smallmid Cap | GE Aerospace vs. Hilton Worldwide Holdings | GE Aerospace vs. NVIDIA | GE Aerospace vs. JPMorgan Chase Co |
| Atlas Copco vs. Xinjiang Goldwind Science | Atlas Copco vs. American Superconductor | Atlas Copco vs. Cummins | Atlas Copco vs. Aquagold International |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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