Correlation Between GE Aerospace and Direxion
Can any of the company-specific risk be diversified away by investing in both GE Aerospace and Direxion 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 Direxion into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GE Aerospace and Direxion, you can compare the effects of market volatilities on GE Aerospace and Direxion 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 Direxion. Check out your portfolio center. Please also check ongoing floating volatility patterns of GE Aerospace and Direxion.
Diversification Opportunities for GE Aerospace and Direxion
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between GE Aerospace and Direxion is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding GE Aerospace and Direxion in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Direxion 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 Direxion. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Direxion has no effect on the direction of GE Aerospace i.e., GE Aerospace and Direxion go up and down completely randomly.
Pair Corralation between GE Aerospace and Direxion
If you would invest 17,170 in GE Aerospace on September 2, 2024 and sell it today you would earn a total of 1,046 from holding GE Aerospace or generate 6.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 4.76% |
| Values | Daily Returns |
GE Aerospace vs. Direxion
Performance |
| Timeline |
| GE Aerospace |
| Direxion |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
GE Aerospace and Direxion Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GE Aerospace and Direxion
The main advantage of trading using opposite GE Aerospace and Direxion positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GE Aerospace position performs unexpectedly, Direxion 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 Direxion will offset losses from the drop in Direxion's long position.| GE Aerospace vs. Illinois Tool Works | GE Aerospace vs. Dover | GE Aerospace vs. Cummins | GE Aerospace vs. Eaton PLC |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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