Correlation Between GE Aerospace and Erasca
Can any of the company-specific risk be diversified away by investing in both GE Aerospace and Erasca 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 Erasca into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GE Aerospace and Erasca Inc, you can compare the effects of market volatilities on GE Aerospace and Erasca 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 Erasca. Check out your portfolio center. Please also check ongoing floating volatility patterns of GE Aerospace and Erasca.
Diversification Opportunities for GE Aerospace and Erasca
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between GE Aerospace and Erasca is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding GE Aerospace and Erasca Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Erasca Inc 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 Erasca. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Erasca Inc has no effect on the direction of GE Aerospace i.e., GE Aerospace and Erasca go up and down completely randomly.
Pair Corralation between GE Aerospace and Erasca
Allowing for the 90-day total investment horizon GE Aerospace is expected to generate 0.4 times more return on investment than Erasca. However, GE Aerospace is 2.51 times less risky than Erasca. It trades about 0.13 of its potential returns per unit of risk. Erasca Inc is currently generating about 0.02 per unit of risk. If you would invest 8,406 in GE Aerospace on August 31, 2024 and sell it today you would earn a total of 9,810 from holding GE Aerospace or generate 116.7% 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. Erasca Inc
Performance |
| Timeline |
| GE Aerospace |
| Erasca Inc |
GE Aerospace and Erasca Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GE Aerospace and Erasca
The main advantage of trading using opposite GE Aerospace and Erasca positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GE Aerospace position performs unexpectedly, Erasca 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 Erasca will offset losses from the drop in Erasca's long position.| GE Aerospace vs. Illinois Tool Works | GE Aerospace vs. Dover | GE Aerospace vs. Cummins | GE Aerospace vs. Eaton PLC |
| Erasca vs. Cue Biopharma | Erasca vs. Eliem Therapeutics | Erasca vs. Inhibrx | Erasca vs. Molecular Partners AG |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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