Correlation Between GE Aerospace and Gold Reserve
Can any of the company-specific risk be diversified away by investing in both GE Aerospace and Gold Reserve 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 Gold Reserve into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GE Aerospace and Gold Reserve, you can compare the effects of market volatilities on GE Aerospace and Gold Reserve 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 Gold Reserve. Check out your portfolio center. Please also check ongoing floating volatility patterns of GE Aerospace and Gold Reserve.
Diversification Opportunities for GE Aerospace and Gold Reserve
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between GE Aerospace and Gold is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding GE Aerospace and Gold Reserve in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gold Reserve 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 Gold Reserve. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gold Reserve has no effect on the direction of GE Aerospace i.e., GE Aerospace and Gold Reserve go up and down completely randomly.
Pair Corralation between GE Aerospace and Gold Reserve
Allowing for the 90-day total investment horizon GE Aerospace is expected to generate 0.36 times more return on investment than Gold Reserve. However, GE Aerospace is 2.81 times less risky than Gold Reserve. It trades about 0.15 of its potential returns per unit of risk. Gold Reserve is currently generating about 0.05 per unit of risk. If you would invest 5,228 in GE Aerospace on August 26, 2024 and sell it today you would earn a total of 12,887 from holding GE Aerospace or generate 246.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
GE Aerospace vs. Gold Reserve
Performance |
| Timeline |
| GE Aerospace |
| Gold Reserve |
GE Aerospace and Gold Reserve Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GE Aerospace and Gold Reserve
The main advantage of trading using opposite GE Aerospace and Gold Reserve positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GE Aerospace position performs unexpectedly, Gold Reserve 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 Gold Reserve will offset losses from the drop in Gold Reserve's long position.| GE Aerospace vs. Illinois Tool Works | GE Aerospace vs. Dover | GE Aerospace vs. Cummins | GE Aerospace vs. Eaton PLC |
| Gold Reserve vs. Monarch Mining | Gold Reserve vs. Lundin Gold | Gold Reserve vs. Liberty Gold Corp | Gold Reserve vs. Minera Alamos |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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