Correlation Between GE Aerospace and Mercato Partners
Can any of the company-specific risk be diversified away by investing in both GE Aerospace and Mercato Partners 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 Mercato Partners into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GE Aerospace and Mercato Partners Acquisition, you can compare the effects of market volatilities on GE Aerospace and Mercato Partners 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 Mercato Partners. Check out your portfolio center. Please also check ongoing floating volatility patterns of GE Aerospace and Mercato Partners.
Diversification Opportunities for GE Aerospace and Mercato Partners
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between GE Aerospace and Mercato is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding GE Aerospace and Mercato Partners Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mercato Partners Acq 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 Mercato Partners. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mercato Partners Acq has no effect on the direction of GE Aerospace i.e., GE Aerospace and Mercato Partners go up and down completely randomly.
Pair Corralation between GE Aerospace and Mercato Partners
Allowing for the 90-day total investment horizon GE Aerospace is expected to generate 30.4 times less return on investment than Mercato Partners. But when comparing it to its historical volatility, GE Aerospace is 23.19 times less risky than Mercato Partners. It trades about 0.16 of its potential returns per unit of risk. Mercato Partners Acquisition is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 0.90 in Mercato Partners Acquisition on August 30, 2024 and sell it today you would earn a total of 9.10 from holding Mercato Partners Acquisition or generate 1011.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 21.21% |
| Values | Daily Returns |
GE Aerospace vs. Mercato Partners Acquisition
Performance |
| Timeline |
| GE Aerospace |
| Mercato Partners Acq |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
GE Aerospace and Mercato Partners Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GE Aerospace and Mercato Partners
The main advantage of trading using opposite GE Aerospace and Mercato Partners positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GE Aerospace position performs unexpectedly, Mercato Partners 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 Mercato Partners will offset losses from the drop in Mercato Partners' long position.| GE Aerospace vs. Parker Hannifin | GE Aerospace vs. Capital Income Builder | GE Aerospace vs. Direxion Daily FTSE | GE Aerospace vs. Dodge Global Stock |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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