Correlation Between GE Aerospace and Eaton Vance
Can any of the company-specific risk be diversified away by investing in both GE Aerospace and Eaton Vance 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 Eaton Vance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GE Aerospace and Eaton Vance Enhanced, you can compare the effects of market volatilities on GE Aerospace and Eaton Vance 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 Eaton Vance. Check out your portfolio center. Please also check ongoing floating volatility patterns of GE Aerospace and Eaton Vance.
Diversification Opportunities for GE Aerospace and Eaton Vance
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between GE Aerospace and Eaton is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding GE Aerospace and Eaton Vance Enhanced in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eaton Vance Enhanced 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 Eaton Vance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eaton Vance Enhanced has no effect on the direction of GE Aerospace i.e., GE Aerospace and Eaton Vance go up and down completely randomly.
Pair Corralation between GE Aerospace and Eaton Vance
Allowing for the 90-day total investment horizon GE Aerospace is expected to generate 1.73 times more return on investment than Eaton Vance. However, GE Aerospace is 1.73 times more volatile than Eaton Vance Enhanced. It trades about 0.15 of its potential returns per unit of risk. Eaton Vance Enhanced is currently generating about 0.11 per unit of risk. If you would invest 5,055 in GE Aerospace on September 13, 2024 and sell it today you would earn a total of 11,809 from holding GE Aerospace or generate 233.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
GE Aerospace vs. Eaton Vance Enhanced
Performance |
| Timeline |
| GE Aerospace |
| Eaton Vance Enhanced |
GE Aerospace and Eaton Vance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GE Aerospace and Eaton Vance
The main advantage of trading using opposite GE Aerospace and Eaton Vance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GE Aerospace position performs unexpectedly, Eaton Vance 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 Eaton Vance will offset losses from the drop in Eaton Vance'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 Stocks Directory module to find actively traded stocks across global markets.
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