Correlation Between GE Aerospace and Forward Pharma
Can any of the company-specific risk be diversified away by investing in both GE Aerospace and Forward Pharma 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 Forward Pharma into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GE Aerospace and Forward Pharma A, you can compare the effects of market volatilities on GE Aerospace and Forward Pharma 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 Forward Pharma. Check out your portfolio center. Please also check ongoing floating volatility patterns of GE Aerospace and Forward Pharma.
Diversification Opportunities for GE Aerospace and Forward Pharma
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between GE Aerospace and Forward is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding GE Aerospace and Forward Pharma A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Forward Pharma A 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 Forward Pharma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Forward Pharma A has no effect on the direction of GE Aerospace i.e., GE Aerospace and Forward Pharma go up and down completely randomly.
Pair Corralation between GE Aerospace and Forward Pharma
If you would invest 8,822 in GE Aerospace on September 12, 2024 and sell it today you would earn a total of 8,305 from holding GE Aerospace or generate 94.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 0.28% |
| Values | Daily Returns |
GE Aerospace vs. Forward Pharma A
Performance |
| Timeline |
| GE Aerospace |
| Forward Pharma A |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
GE Aerospace and Forward Pharma Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GE Aerospace and Forward Pharma
The main advantage of trading using opposite GE Aerospace and Forward Pharma positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GE Aerospace position performs unexpectedly, Forward Pharma 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 Forward Pharma will offset losses from the drop in Forward Pharma'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 |
| Forward Pharma vs. Universal Technical Institute | Forward Pharma vs. Playtika Holding Corp | Forward Pharma vs. Corsair Gaming | Forward Pharma vs. Coursera |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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