Correlation Between GE Aerospace and JP Morgan
Can any of the company-specific risk be diversified away by investing in both GE Aerospace and JP Morgan 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 JP Morgan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GE Aerospace and JP Morgan Exchange Traded, you can compare the effects of market volatilities on GE Aerospace and JP Morgan 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 JP Morgan. Check out your portfolio center. Please also check ongoing floating volatility patterns of GE Aerospace and JP Morgan.
Diversification Opportunities for GE Aerospace and JP Morgan
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between GE Aerospace and JADE is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding GE Aerospace and JP Morgan Exchange Traded in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JP Morgan Exchange 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 JP Morgan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JP Morgan Exchange has no effect on the direction of GE Aerospace i.e., GE Aerospace and JP Morgan go up and down completely randomly.
Pair Corralation between GE Aerospace and JP Morgan
Allowing for the 90-day total investment horizon GE Aerospace is expected to generate 1.67 times more return on investment than JP Morgan. However, GE Aerospace is 1.67 times more volatile than JP Morgan Exchange Traded. It trades about 0.16 of its potential returns per unit of risk. JP Morgan Exchange Traded is currently generating about -0.01 per unit of risk. If you would invest 8,871 in GE Aerospace on September 1, 2024 and sell it today you would earn a total of 9,345 from holding GE Aerospace or generate 105.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 50.93% |
| Values | Daily Returns |
GE Aerospace vs. JP Morgan Exchange Traded
Performance |
| Timeline |
| GE Aerospace |
| JP Morgan Exchange |
GE Aerospace and JP Morgan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GE Aerospace and JP Morgan
The main advantage of trading using opposite GE Aerospace and JP Morgan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GE Aerospace position performs unexpectedly, JP Morgan 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 JP Morgan will offset losses from the drop in JP Morgan's long position.| GE Aerospace vs. Illinois Tool Works | GE Aerospace vs. Dover | GE Aerospace vs. Cummins | GE Aerospace vs. Eaton PLC |
| JP Morgan vs. Xtrackers MSCI Emerging | JP Morgan vs. FlexShares Morningstar Emerging | JP Morgan vs. First Trust Emerging |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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