Correlation Between GE Aerospace and IndexIQ
Can any of the company-specific risk be diversified away by investing in both GE Aerospace and IndexIQ 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 IndexIQ into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GE Aerospace and IndexIQ, you can compare the effects of market volatilities on GE Aerospace and IndexIQ 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 IndexIQ. Check out your portfolio center. Please also check ongoing floating volatility patterns of GE Aerospace and IndexIQ.
Diversification Opportunities for GE Aerospace and IndexIQ
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between GE Aerospace and IndexIQ is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding GE Aerospace and IndexIQ in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IndexIQ 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 IndexIQ. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IndexIQ has no effect on the direction of GE Aerospace i.e., GE Aerospace and IndexIQ go up and down completely randomly.
Pair Corralation between GE Aerospace and IndexIQ
If you would invest 16,204 in GE Aerospace on September 3, 2024 and sell it today you would earn a total of 2,012 from holding GE Aerospace or generate 12.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 0.8% |
| Values | Daily Returns |
GE Aerospace vs. IndexIQ
Performance |
| Timeline |
| GE Aerospace |
| IndexIQ |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
GE Aerospace and IndexIQ Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GE Aerospace and IndexIQ
The main advantage of trading using opposite GE Aerospace and IndexIQ positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GE Aerospace position performs unexpectedly, IndexIQ 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 IndexIQ will offset losses from the drop in IndexIQ'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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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