Correlation Between GE Aerospace and CompuGroup Medical
Can any of the company-specific risk be diversified away by investing in both GE Aerospace and CompuGroup Medical 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 CompuGroup Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GE Aerospace and CompuGroup Medical SE, you can compare the effects of market volatilities on GE Aerospace and CompuGroup Medical 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 CompuGroup Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of GE Aerospace and CompuGroup Medical.
Diversification Opportunities for GE Aerospace and CompuGroup Medical
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between GE Aerospace and CompuGroup is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding GE Aerospace and CompuGroup Medical SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CompuGroup Medical 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 CompuGroup Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CompuGroup Medical has no effect on the direction of GE Aerospace i.e., GE Aerospace and CompuGroup Medical go up and down completely randomly.
Pair Corralation between GE Aerospace and CompuGroup Medical
Allowing for the 90-day total investment horizon GE Aerospace is expected to generate 0.39 times more return on investment than CompuGroup Medical. However, GE Aerospace is 2.56 times less risky than CompuGroup Medical. It trades about 0.12 of its potential returns per unit of risk. CompuGroup Medical SE is currently generating about -0.07 per unit of risk. If you would invest 8,244 in GE Aerospace on September 12, 2024 and sell it today you would earn a total of 8,883 from holding GE Aerospace or generate 107.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 55.5% |
| Values | Daily Returns |
GE Aerospace vs. CompuGroup Medical SE
Performance |
| Timeline |
| GE Aerospace |
| CompuGroup Medical |
GE Aerospace and CompuGroup Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GE Aerospace and CompuGroup Medical
The main advantage of trading using opposite GE Aerospace and CompuGroup Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GE Aerospace position performs unexpectedly, CompuGroup Medical 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 CompuGroup Medical will offset losses from the drop in CompuGroup Medical'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 |
| CompuGroup Medical vs. Veeva Systems Class | CompuGroup Medical vs. GE HealthCare Technologies | CompuGroup Medical vs. M3 Inc | CompuGroup Medical vs. Solventum 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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