Correlation Between GE Aerospace and Colonial Coal
Can any of the company-specific risk be diversified away by investing in both GE Aerospace and Colonial Coal 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 Colonial Coal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GE Aerospace and Colonial Coal International, you can compare the effects of market volatilities on GE Aerospace and Colonial Coal 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 Colonial Coal. Check out your portfolio center. Please also check ongoing floating volatility patterns of GE Aerospace and Colonial Coal.
Diversification Opportunities for GE Aerospace and Colonial Coal
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between GE Aerospace and Colonial is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding GE Aerospace and Colonial Coal International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Colonial Coal Intern 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 Colonial Coal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Colonial Coal Intern has no effect on the direction of GE Aerospace i.e., GE Aerospace and Colonial Coal go up and down completely randomly.
Pair Corralation between GE Aerospace and Colonial Coal
Allowing for the 90-day total investment horizon GE Aerospace is expected to generate 1.01 times less return on investment than Colonial Coal. But when comparing it to its historical volatility, GE Aerospace is 3.04 times less risky than Colonial Coal. It trades about 0.13 of its potential returns per unit of risk. Colonial Coal International is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 80.00 in Colonial Coal International on October 23, 2024 and sell it today you would earn a total of 50.00 from holding Colonial Coal International or generate 62.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
GE Aerospace vs. Colonial Coal International
Performance |
| Timeline |
| GE Aerospace |
| Colonial Coal Intern |
GE Aerospace and Colonial Coal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GE Aerospace and Colonial Coal
The main advantage of trading using opposite GE Aerospace and Colonial Coal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GE Aerospace position performs unexpectedly, Colonial Coal 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 Colonial Coal will offset losses from the drop in Colonial Coal's long position.| GE Aerospace vs. Illinois Tool Works | GE Aerospace vs. Dover | GE Aerospace vs. Cummins | GE Aerospace vs. Eaton PLC |
| Colonial Coal vs. Coronado Global Resources | Colonial Coal vs. Alpha Metallurgical Resources | Colonial Coal vs. Warrior Met Coal | Colonial Coal vs. Ramaco Resources |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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