Correlation Between GE Aerospace and Nuveen Amt-free
Can any of the company-specific risk be diversified away by investing in both GE Aerospace and Nuveen Amt-free 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 Nuveen Amt-free into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GE Aerospace and Nuveen Amt Free Municipal, you can compare the effects of market volatilities on GE Aerospace and Nuveen Amt-free 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 Nuveen Amt-free. Check out your portfolio center. Please also check ongoing floating volatility patterns of GE Aerospace and Nuveen Amt-free.
Diversification Opportunities for GE Aerospace and Nuveen Amt-free
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between GE Aerospace and Nuveen is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding GE Aerospace and Nuveen Amt Free Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuveen Amt Free 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 Nuveen Amt-free. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nuveen Amt Free has no effect on the direction of GE Aerospace i.e., GE Aerospace and Nuveen Amt-free go up and down completely randomly.
Pair Corralation between GE Aerospace and Nuveen Amt-free
Allowing for the 90-day total investment horizon GE Aerospace is expected to generate 4.77 times more return on investment than Nuveen Amt-free. However, GE Aerospace is 4.77 times more volatile than Nuveen Amt Free Municipal. It trades about 0.11 of its potential returns per unit of risk. Nuveen Amt Free Municipal is currently generating about 0.05 per unit of risk. If you would invest 12,459 in GE Aerospace on August 27, 2024 and sell it today you would earn a total of 5,656 from holding GE Aerospace or generate 45.4% 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. Nuveen Amt Free Municipal
Performance |
| Timeline |
| GE Aerospace |
| Nuveen Amt Free |
GE Aerospace and Nuveen Amt-free Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GE Aerospace and Nuveen Amt-free
The main advantage of trading using opposite GE Aerospace and Nuveen Amt-free positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GE Aerospace position performs unexpectedly, Nuveen Amt-free 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 Nuveen Amt-free will offset losses from the drop in Nuveen Amt-free's long position.| GE Aerospace vs. Illinois Tool Works | GE Aerospace vs. Dover | GE Aerospace vs. Cummins | GE Aerospace vs. Eaton PLC |
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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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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