Correlation Between GE Aerospace and BNY Mellon
Can any of the company-specific risk be diversified away by investing in both GE Aerospace and BNY Mellon 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 BNY Mellon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GE Aerospace and BNY Mellon ETF, you can compare the effects of market volatilities on GE Aerospace and BNY Mellon 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 BNY Mellon. Check out your portfolio center. Please also check ongoing floating volatility patterns of GE Aerospace and BNY Mellon.
Diversification Opportunities for GE Aerospace and BNY Mellon
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between GE Aerospace and BNY is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding GE Aerospace and BNY Mellon ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BNY Mellon ETF 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 BNY Mellon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BNY Mellon ETF has no effect on the direction of GE Aerospace i.e., GE Aerospace and BNY Mellon go up and down completely randomly.
Pair Corralation between GE Aerospace and BNY Mellon
Allowing for the 90-day total investment horizon GE Aerospace is expected to generate 2.11 times more return on investment than BNY Mellon. However, GE Aerospace is 2.11 times more volatile than BNY Mellon ETF. It trades about 0.11 of its potential returns per unit of risk. BNY Mellon ETF is currently generating about 0.05 per unit of risk. If you would invest 12,536 in GE Aerospace on September 1, 2024 and sell it today you would earn a total of 5,680 from holding GE Aerospace or generate 45.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.47% |
| Values | Daily Returns |
GE Aerospace vs. BNY Mellon ETF
Performance |
| Timeline |
| GE Aerospace |
| BNY Mellon ETF |
GE Aerospace and BNY Mellon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GE Aerospace and BNY Mellon
The main advantage of trading using opposite GE Aerospace and BNY Mellon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GE Aerospace position performs unexpectedly, BNY Mellon 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 BNY Mellon will offset losses from the drop in BNY Mellon's long position.| GE Aerospace vs. Illinois Tool Works | GE Aerospace vs. Dover | GE Aerospace vs. Cummins | GE Aerospace vs. Eaton PLC |
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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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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