Correlation Between GE Aerospace and T Rex
Can any of the company-specific risk be diversified away by investing in both GE Aerospace and T Rex 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 T Rex into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GE Aerospace and T Rex 2X Inverse, you can compare the effects of market volatilities on GE Aerospace and T Rex 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 T Rex. Check out your portfolio center. Please also check ongoing floating volatility patterns of GE Aerospace and T Rex.
Diversification Opportunities for GE Aerospace and T Rex
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between GE Aerospace and ETQ is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding GE Aerospace and T Rex 2X Inverse in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on T Rex 2X 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 T Rex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of T Rex 2X has no effect on the direction of GE Aerospace i.e., GE Aerospace and T Rex go up and down completely randomly.
Pair Corralation between GE Aerospace and T Rex
Allowing for the 90-day total investment horizon GE Aerospace is expected to generate 0.18 times more return on investment than T Rex. However, GE Aerospace is 5.48 times less risky than T Rex. It trades about -0.19 of its potential returns per unit of risk. T Rex 2X Inverse is currently generating about -0.16 per unit of risk. If you would invest 18,456 in GE Aerospace on September 12, 2024 and sell it today you would lose (1,329) from holding GE Aerospace or give up 7.2% 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. T Rex 2X Inverse
Performance |
| Timeline |
| GE Aerospace |
| T Rex 2X |
GE Aerospace and T Rex Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GE Aerospace and T Rex
The main advantage of trading using opposite GE Aerospace and T Rex positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GE Aerospace position performs unexpectedly, T Rex 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 T Rex will offset losses from the drop in T Rex's long position.| GE Aerospace vs. Victory Integrity Smallmid Cap | GE Aerospace vs. Hilton Worldwide Holdings | GE Aerospace vs. NVIDIA | GE Aerospace vs. JPMorgan Chase Co |
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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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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