Correlation Between GE Aerospace and Nabtesco
Can any of the company-specific risk be diversified away by investing in both GE Aerospace and Nabtesco 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 Nabtesco into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GE Aerospace and Nabtesco, you can compare the effects of market volatilities on GE Aerospace and Nabtesco 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 Nabtesco. Check out your portfolio center. Please also check ongoing floating volatility patterns of GE Aerospace and Nabtesco.
Diversification Opportunities for GE Aerospace and Nabtesco
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between GE Aerospace and Nabtesco is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding GE Aerospace and Nabtesco in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nabtesco 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 Nabtesco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nabtesco has no effect on the direction of GE Aerospace i.e., GE Aerospace and Nabtesco go up and down completely randomly.
Pair Corralation between GE Aerospace and Nabtesco
Allowing for the 90-day total investment horizon GE Aerospace is expected to generate 34.86 times less return on investment than Nabtesco. But when comparing it to its historical volatility, GE Aerospace is 7.61 times less risky than Nabtesco. It trades about 0.04 of its potential returns per unit of risk. Nabtesco is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 721.00 in Nabtesco on October 11, 2024 and sell it today you would earn a total of 308.00 from holding Nabtesco or generate 42.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
GE Aerospace vs. Nabtesco
Performance |
| Timeline |
| GE Aerospace |
| Nabtesco |
GE Aerospace and Nabtesco Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GE Aerospace and Nabtesco
The main advantage of trading using opposite GE Aerospace and Nabtesco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GE Aerospace position performs unexpectedly, Nabtesco 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 Nabtesco will offset losses from the drop in Nabtesco's long position.| GE Aerospace vs. Illinois Tool Works | GE Aerospace vs. Dover | GE Aerospace vs. Cummins | GE Aerospace vs. Eaton PLC |
| Nabtesco vs. Mitsubishi Heavy Industries | Nabtesco vs. Yamaha Motor Co | Nabtesco vs. Mitsubishi Electric Corp | Nabtesco vs. Isuzu Motors |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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