Correlation Between GE Aerospace and IShares JP
Can any of the company-specific risk be diversified away by investing in both GE Aerospace and IShares JP 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 IShares JP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GE Aerospace and iShares JP Morgan, you can compare the effects of market volatilities on GE Aerospace and IShares JP 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 IShares JP. Check out your portfolio center. Please also check ongoing floating volatility patterns of GE Aerospace and IShares JP.
Diversification Opportunities for GE Aerospace and IShares JP
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between GE Aerospace and IShares is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding GE Aerospace and iShares JP Morgan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares JP Morgan 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 IShares JP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares JP Morgan has no effect on the direction of GE Aerospace i.e., GE Aerospace and IShares JP go up and down completely randomly.
Pair Corralation between GE Aerospace and IShares JP
Allowing for the 90-day total investment horizon GE Aerospace is expected to generate 4.6 times more return on investment than IShares JP. However, GE Aerospace is 4.6 times more volatile than iShares JP Morgan. It trades about 0.14 of its potential returns per unit of risk. iShares JP Morgan is currently generating about 0.15 per unit of risk. If you would invest 9,722 in GE Aerospace on August 27, 2024 and sell it today you would earn a total of 8,393 from holding GE Aerospace or generate 86.33% 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. iShares JP Morgan
Performance |
| Timeline |
| GE Aerospace |
| iShares JP Morgan |
GE Aerospace and IShares JP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GE Aerospace and IShares JP
The main advantage of trading using opposite GE Aerospace and IShares JP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GE Aerospace position performs unexpectedly, IShares JP 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 IShares JP will offset losses from the drop in IShares JP's long position.| GE Aerospace vs. Illinois Tool Works | GE Aerospace vs. Dover | GE Aerospace vs. Cummins | GE Aerospace vs. Eaton PLC |
| IShares JP vs. VanEck Emerging Markets | IShares JP vs. iShares Intl High | IShares JP vs. iShares JP Morgan | IShares JP vs. iShares International High |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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