Correlation Between GE Aerospace and Northern High
Can any of the company-specific risk be diversified away by investing in both GE Aerospace and Northern High 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 Northern High into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GE Aerospace and Northern High Yield, you can compare the effects of market volatilities on GE Aerospace and Northern High 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 Northern High. Check out your portfolio center. Please also check ongoing floating volatility patterns of GE Aerospace and Northern High.
Diversification Opportunities for GE Aerospace and Northern High
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between GE Aerospace and Northern is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding GE Aerospace and Northern High Yield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northern High Yield 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 Northern High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Northern High Yield has no effect on the direction of GE Aerospace i.e., GE Aerospace and Northern High go up and down completely randomly.
Pair Corralation between GE Aerospace and Northern High
Allowing for the 90-day total investment horizon GE Aerospace is expected to generate 7.28 times more return on investment than Northern High. However, GE Aerospace is 7.28 times more volatile than Northern High Yield. It trades about 0.16 of its potential returns per unit of risk. Northern High Yield is currently generating about 0.2 per unit of risk. If you would invest 8,871 in GE Aerospace on September 1, 2024 and sell it today you would earn a total of 9,345 from holding GE Aerospace or generate 105.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
GE Aerospace vs. Northern High Yield
Performance |
| Timeline |
| GE Aerospace |
| Northern High Yield |
GE Aerospace and Northern High Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GE Aerospace and Northern High
The main advantage of trading using opposite GE Aerospace and Northern High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GE Aerospace position performs unexpectedly, Northern High 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 Northern High will offset losses from the drop in Northern High's long position.| GE Aerospace vs. Illinois Tool Works | GE Aerospace vs. Dover | GE Aerospace vs. Cummins | GE Aerospace vs. Eaton PLC |
| Northern High vs. Northern Emerging Markets | Northern High vs. Northern Global Real | Northern High vs. Northern International Equity | Northern High vs. Northern Small Cap |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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