Correlation Between GE Aerospace and Roundhill Investments
Can any of the company-specific risk be diversified away by investing in both GE Aerospace and Roundhill Investments 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 Roundhill Investments into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GE Aerospace and Roundhill Investments, you can compare the effects of market volatilities on GE Aerospace and Roundhill Investments 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 Roundhill Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of GE Aerospace and Roundhill Investments.
Diversification Opportunities for GE Aerospace and Roundhill Investments
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between GE Aerospace and Roundhill is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding GE Aerospace and Roundhill Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Roundhill Investments 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 Roundhill Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Roundhill Investments has no effect on the direction of GE Aerospace i.e., GE Aerospace and Roundhill Investments go up and down completely randomly.
Pair Corralation between GE Aerospace and Roundhill Investments
Allowing for the 90-day total investment horizon GE Aerospace is expected to generate 1.31 times more return on investment than Roundhill Investments. However, GE Aerospace is 1.31 times more volatile than Roundhill Investments. It trades about 0.16 of its potential returns per unit of risk. Roundhill Investments is currently generating about 0.0 per unit of risk. If you would invest 5,029 in GE Aerospace on August 30, 2024 and sell it today you would earn a total of 13,031 from holding GE Aerospace or generate 259.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 31.31% |
| Values | Daily Returns |
GE Aerospace vs. Roundhill Investments
Performance |
| Timeline |
| GE Aerospace |
| Roundhill Investments |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
GE Aerospace and Roundhill Investments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GE Aerospace and Roundhill Investments
The main advantage of trading using opposite GE Aerospace and Roundhill Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GE Aerospace position performs unexpectedly, Roundhill Investments 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 Roundhill Investments will offset losses from the drop in Roundhill Investments' long position.| GE Aerospace vs. Parker Hannifin | GE Aerospace vs. Capital Income Builder | GE Aerospace vs. Direxion Daily FTSE | GE Aerospace vs. Dodge Global Stock |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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