Correlation Between GE Aerospace and Datametrex
Can any of the company-specific risk be diversified away by investing in both GE Aerospace and Datametrex 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 Datametrex into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GE Aerospace and Datametrex AI Limited, you can compare the effects of market volatilities on GE Aerospace and Datametrex 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 Datametrex. Check out your portfolio center. Please also check ongoing floating volatility patterns of GE Aerospace and Datametrex.
Diversification Opportunities for GE Aerospace and Datametrex
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between GE Aerospace and Datametrex is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding GE Aerospace and Datametrex AI Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Datametrex AI Limited 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 Datametrex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Datametrex AI Limited has no effect on the direction of GE Aerospace i.e., GE Aerospace and Datametrex go up and down completely randomly.
Pair Corralation between GE Aerospace and Datametrex
Allowing for the 90-day total investment horizon GE Aerospace is expected to generate 9.51 times less return on investment than Datametrex. But when comparing it to its historical volatility, GE Aerospace is 12.61 times less risky than Datametrex. It trades about 0.11 of its potential returns per unit of risk. Datametrex AI Limited is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 0.49 in Datametrex AI Limited on August 31, 2024 and sell it today you would lose (0.05) from holding Datametrex AI Limited or give up 10.2% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
GE Aerospace vs. Datametrex AI Limited
Performance |
| Timeline |
| GE Aerospace |
| Datametrex AI Limited |
GE Aerospace and Datametrex Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GE Aerospace and Datametrex
The main advantage of trading using opposite GE Aerospace and Datametrex positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GE Aerospace position performs unexpectedly, Datametrex 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 Datametrex will offset losses from the drop in Datametrex's long position.| GE Aerospace vs. Illinois Tool Works | GE Aerospace vs. Dover | GE Aerospace vs. Cummins | GE Aerospace vs. Eaton PLC |
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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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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