Correlation Between GE Aerospace and Nordex SE
Can any of the company-specific risk be diversified away by investing in both GE Aerospace and Nordex SE 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 Nordex SE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GE Aerospace and Nordex SE, you can compare the effects of market volatilities on GE Aerospace and Nordex SE 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 Nordex SE. Check out your portfolio center. Please also check ongoing floating volatility patterns of GE Aerospace and Nordex SE.
Diversification Opportunities for GE Aerospace and Nordex SE
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between GE Aerospace and Nordex is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding GE Aerospace and Nordex SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nordex SE 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 Nordex SE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nordex SE has no effect on the direction of GE Aerospace i.e., GE Aerospace and Nordex SE go up and down completely randomly.
Pair Corralation between GE Aerospace and Nordex SE
If you would invest 17,178 in GE Aerospace on September 1, 2024 and sell it today you would earn a total of 1,038 from holding GE Aerospace or generate 6.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
GE Aerospace vs. Nordex SE
Performance |
| Timeline |
| GE Aerospace |
| Nordex SE |
GE Aerospace and Nordex SE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GE Aerospace and Nordex SE
The main advantage of trading using opposite GE Aerospace and Nordex SE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GE Aerospace position performs unexpectedly, Nordex SE 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 Nordex SE will offset losses from the drop in Nordex SE's long position.| GE Aerospace vs. Illinois Tool Works | GE Aerospace vs. Dover | GE Aerospace vs. Cummins | GE Aerospace vs. Eaton PLC |
| Nordex SE vs. GE Aerospace | Nordex SE vs. Eaton PLC | Nordex SE vs. Siemens AG Class | Nordex SE vs. Parker Hannifin |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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