Correlation Between GE Aerospace and MF Bancorp
Can any of the company-specific risk be diversified away by investing in both GE Aerospace and MF Bancorp 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 MF Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GE Aerospace and MF Bancorp, you can compare the effects of market volatilities on GE Aerospace and MF Bancorp 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 MF Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of GE Aerospace and MF Bancorp.
Diversification Opportunities for GE Aerospace and MF Bancorp
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between GE Aerospace and MFBP is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding GE Aerospace and MF Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MF Bancorp 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 MF Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MF Bancorp has no effect on the direction of GE Aerospace i.e., GE Aerospace and MF Bancorp go up and down completely randomly.
Pair Corralation between GE Aerospace and MF Bancorp
Allowing for the 90-day total investment horizon GE Aerospace is expected to generate 0.7 times more return on investment than MF Bancorp. However, GE Aerospace is 1.43 times less risky than MF Bancorp. It trades about 0.11 of its potential returns per unit of risk. MF Bancorp is currently generating about -0.05 per unit of risk. If you would invest 17,405 in GE Aerospace on August 30, 2024 and sell it today you would earn a total of 655.00 from holding GE Aerospace or generate 3.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
GE Aerospace vs. MF Bancorp
Performance |
| Timeline |
| GE Aerospace |
| MF Bancorp |
GE Aerospace and MF Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GE Aerospace and MF Bancorp
The main advantage of trading using opposite GE Aerospace and MF Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GE Aerospace position performs unexpectedly, MF Bancorp 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 MF Bancorp will offset losses from the drop in MF Bancorp's long position.| GE Aerospace vs. Illinois Tool Works | GE Aerospace vs. Dover | GE Aerospace vs. Cummins | GE Aerospace vs. Eaton PLC |
| MF Bancorp vs. Citizens Bancshares Corp | MF Bancorp vs. Harbor Bankshares | MF Bancorp vs. United Bancorporation of | MF Bancorp vs. KS Bancorp |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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