Correlation Between GE Aerospace and Dover
Can any of the company-specific risk be diversified away by investing in both GE Aerospace and Dover 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 Dover into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GE Aerospace and Dover, you can compare the effects of market volatilities on GE Aerospace and Dover 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 Dover. Check out your portfolio center. Please also check ongoing floating volatility patterns of GE Aerospace and Dover.
Diversification Opportunities for GE Aerospace and Dover
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between GE Aerospace and Dover is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding GE Aerospace and Dover in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dover 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 Dover. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dover has no effect on the direction of GE Aerospace i.e., GE Aerospace and Dover go up and down completely randomly.
Pair Corralation between GE Aerospace and Dover
Allowing for the 90-day total investment horizon GE Aerospace is expected to generate 1.23 times more return on investment than Dover. However, GE Aerospace is 1.23 times more volatile than Dover. It trades about 0.15 of its potential returns per unit of risk. Dover is currently generating about 0.06 per unit of risk. If you would invest 5,266 in GE Aerospace on August 27, 2024 and sell it today you would earn a total of 12,849 from holding GE Aerospace or generate 244.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
GE Aerospace vs. Dover
Performance |
| Timeline |
| GE Aerospace |
| Dover |
GE Aerospace and Dover Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GE Aerospace and Dover
The main advantage of trading using opposite GE Aerospace and Dover positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GE Aerospace position performs unexpectedly, Dover 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 Dover will offset losses from the drop in Dover's long position.| GE Aerospace vs. Illinois Tool Works | GE Aerospace vs. Dover | GE Aerospace vs. Cummins | GE Aerospace vs. Eaton PLC |
| Dover vs. Aquagold International | Dover vs. Morningstar Unconstrained Allocation | Dover vs. High Yield Municipal Fund | Dover 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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