Correlation Between GE Aerospace and NuVista Energy
Can any of the company-specific risk be diversified away by investing in both GE Aerospace and NuVista Energy 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 NuVista Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GE Aerospace and NuVista Energy, you can compare the effects of market volatilities on GE Aerospace and NuVista Energy 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 NuVista Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of GE Aerospace and NuVista Energy.
Diversification Opportunities for GE Aerospace and NuVista Energy
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between GE Aerospace and NuVista is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding GE Aerospace and NuVista Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NuVista Energy 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 NuVista Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NuVista Energy has no effect on the direction of GE Aerospace i.e., GE Aerospace and NuVista Energy go up and down completely randomly.
Pair Corralation between GE Aerospace and NuVista Energy
Allowing for the 90-day total investment horizon GE Aerospace is expected to generate 0.93 times more return on investment than NuVista Energy. However, GE Aerospace is 1.07 times less risky than NuVista Energy. It trades about 0.06 of its potential returns per unit of risk. NuVista Energy is currently generating about 0.0 per unit of risk. If you would invest 16,462 in GE Aerospace on August 29, 2024 and sell it today you would earn a total of 1,998 from holding GE Aerospace or generate 12.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
GE Aerospace vs. NuVista Energy
Performance |
| Timeline |
| GE Aerospace |
| NuVista Energy |
GE Aerospace and NuVista Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GE Aerospace and NuVista Energy
The main advantage of trading using opposite GE Aerospace and NuVista Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GE Aerospace position performs unexpectedly, NuVista Energy 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 NuVista Energy will offset losses from the drop in NuVista Energy's long position.| GE Aerospace vs. Illinois Tool Works | GE Aerospace vs. Dover | GE Aerospace vs. Cummins | GE Aerospace vs. Eaton PLC |
| NuVista Energy vs. Petroleo Brasileiro Petrobras | NuVista Energy vs. Equinor ASA ADR | NuVista Energy vs. Eni SpA ADR | NuVista Energy vs. YPF Sociedad Anonima |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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