Correlation Between GE Aerospace and United States
Can any of the company-specific risk be diversified away by investing in both GE Aerospace and United States 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 United States into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GE Aerospace and United States Copper, you can compare the effects of market volatilities on GE Aerospace and United States 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 United States. Check out your portfolio center. Please also check ongoing floating volatility patterns of GE Aerospace and United States.
Diversification Opportunities for GE Aerospace and United States
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between GE Aerospace and United is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding GE Aerospace and United States Copper in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United States Copper 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 United States. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United States Copper has no effect on the direction of GE Aerospace i.e., GE Aerospace and United States go up and down completely randomly.
Pair Corralation between GE Aerospace and United States
Allowing for the 90-day total investment horizon GE Aerospace is expected to generate 0.83 times more return on investment than United States. However, GE Aerospace is 1.2 times less risky than United States. It trades about 0.16 of its potential returns per unit of risk. United States Copper is currently generating about -0.16 per unit of risk. If you would invest 17,536 in GE Aerospace on August 29, 2024 and sell it today you would earn a total of 924.00 from holding GE Aerospace or generate 5.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
GE Aerospace vs. United States Copper
Performance |
| Timeline |
| GE Aerospace |
| United States Copper |
GE Aerospace and United States Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GE Aerospace and United States
The main advantage of trading using opposite GE Aerospace and United States positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GE Aerospace position performs unexpectedly, United States 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 United States will offset losses from the drop in United States' long position.| GE Aerospace vs. Illinois Tool Works | GE Aerospace vs. Dover | GE Aerospace vs. Cummins | GE Aerospace vs. Eaton PLC |
| United States vs. Aquagold International | United States vs. Morningstar Unconstrained Allocation | United States vs. High Yield Municipal Fund | United States vs. Thrivent High Yield |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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