Correlation Between GE Aerospace and Mitsubishi Heavy
Can any of the company-specific risk be diversified away by investing in both GE Aerospace and Mitsubishi Heavy 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 Mitsubishi Heavy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GE Aerospace and Mitsubishi Heavy Industries, you can compare the effects of market volatilities on GE Aerospace and Mitsubishi Heavy 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 Mitsubishi Heavy. Check out your portfolio center. Please also check ongoing floating volatility patterns of GE Aerospace and Mitsubishi Heavy.
Diversification Opportunities for GE Aerospace and Mitsubishi Heavy
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between GE Aerospace and Mitsubishi is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding GE Aerospace and Mitsubishi Heavy Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mitsubishi Heavy Ind 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 Mitsubishi Heavy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mitsubishi Heavy Ind has no effect on the direction of GE Aerospace i.e., GE Aerospace and Mitsubishi Heavy go up and down completely randomly.
Pair Corralation between GE Aerospace and Mitsubishi Heavy
Allowing for the 90-day total investment horizon GE Aerospace is expected to generate 0.39 times more return on investment than Mitsubishi Heavy. However, GE Aerospace is 2.59 times less risky than Mitsubishi Heavy. It trades about 0.09 of its potential returns per unit of risk. Mitsubishi Heavy Industries is currently generating about -0.09 per unit of risk. If you would invest 19,446 in GE Aerospace on November 28, 2024 and sell it today you would earn a total of 481.00 from holding GE Aerospace or generate 2.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
GE Aerospace vs. Mitsubishi Heavy Industries
Performance |
| Timeline |
| GE Aerospace |
| Mitsubishi Heavy Ind |
GE Aerospace and Mitsubishi Heavy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GE Aerospace and Mitsubishi Heavy
The main advantage of trading using opposite GE Aerospace and Mitsubishi Heavy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GE Aerospace position performs unexpectedly, Mitsubishi Heavy 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 Mitsubishi Heavy will offset losses from the drop in Mitsubishi Heavy's long position.| GE Aerospace vs. Illinois Tool Works | GE Aerospace vs. Dover | GE Aerospace vs. Cummins | GE Aerospace vs. Eaton PLC |
| Mitsubishi Heavy vs. Kawasaki Heavy Industries | Mitsubishi Heavy vs. Mitsubishi Electric Corp | Mitsubishi Heavy vs. Mitsubishi Corp | Mitsubishi Heavy vs. Marubeni Corp ADR |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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