Correlation Between GE Aerospace and Great-west
Can any of the company-specific risk be diversified away by investing in both GE Aerospace and Great-west 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 Great-west into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GE Aerospace and Great West T Rowe, you can compare the effects of market volatilities on GE Aerospace and Great-west 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 Great-west. Check out your portfolio center. Please also check ongoing floating volatility patterns of GE Aerospace and Great-west.
Diversification Opportunities for GE Aerospace and Great-west
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between GE Aerospace and Great-west is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding GE Aerospace and Great West T Rowe in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Great West T 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 Great-west. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Great West T has no effect on the direction of GE Aerospace i.e., GE Aerospace and Great-west go up and down completely randomly.
Pair Corralation between GE Aerospace and Great-west
Allowing for the 90-day total investment horizon GE Aerospace is expected to generate 1.28 times more return on investment than Great-west. However, GE Aerospace is 1.28 times more volatile than Great West T Rowe. It trades about 0.14 of its potential returns per unit of risk. Great West T Rowe is currently generating about -0.01 per unit of risk. If you would invest 7,039 in GE Aerospace on December 2, 2024 and sell it today you would earn a total of 13,659 from holding GE Aerospace or generate 194.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
GE Aerospace vs. Great West T Rowe
Performance |
| Timeline |
| GE Aerospace |
| Great West T |
GE Aerospace and Great-west Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GE Aerospace and Great-west
The main advantage of trading using opposite GE Aerospace and Great-west positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GE Aerospace position performs unexpectedly, Great-west 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 Great-west will offset losses from the drop in Great-west's long position.| GE Aerospace vs. Illinois Tool Works | ||
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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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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