Correlation Between GE Aerospace and McChip Resources
Can any of the company-specific risk be diversified away by investing in both GE Aerospace and McChip Resources 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 McChip Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GE Aerospace and McChip Resources, you can compare the effects of market volatilities on GE Aerospace and McChip Resources 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 McChip Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of GE Aerospace and McChip Resources.
Diversification Opportunities for GE Aerospace and McChip Resources
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between GE Aerospace and McChip is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding GE Aerospace and McChip Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on McChip Resources 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 McChip Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of McChip Resources has no effect on the direction of GE Aerospace i.e., GE Aerospace and McChip Resources go up and down completely randomly.
Pair Corralation between GE Aerospace and McChip Resources
If you would invest 17,536 in GE Aerospace on August 27, 2024 and sell it today you would earn a total of 485.00 from holding GE Aerospace or generate 2.77% 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. McChip Resources
Performance |
| Timeline |
| GE Aerospace |
| McChip Resources |
GE Aerospace and McChip Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GE Aerospace and McChip Resources
The main advantage of trading using opposite GE Aerospace and McChip Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GE Aerospace position performs unexpectedly, McChip Resources 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 McChip Resources will offset losses from the drop in McChip Resources' 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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