Correlation Between GE Aerospace and Oasis Petroleum
Can any of the company-specific risk be diversified away by investing in both GE Aerospace and Oasis Petroleum 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 Oasis Petroleum into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GE Aerospace and Oasis Petroleum, you can compare the effects of market volatilities on GE Aerospace and Oasis Petroleum 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 Oasis Petroleum. Check out your portfolio center. Please also check ongoing floating volatility patterns of GE Aerospace and Oasis Petroleum.
Diversification Opportunities for GE Aerospace and Oasis Petroleum
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between GE Aerospace and Oasis is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding GE Aerospace and Oasis Petroleum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oasis Petroleum 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 Oasis Petroleum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oasis Petroleum has no effect on the direction of GE Aerospace i.e., GE Aerospace and Oasis Petroleum go up and down completely randomly.
Pair Corralation between GE Aerospace and Oasis Petroleum
Allowing for the 90-day total investment horizon GE Aerospace is expected to generate 2.78 times less return on investment than Oasis Petroleum. But when comparing it to its historical volatility, GE Aerospace is 2.66 times less risky than Oasis Petroleum. It trades about 0.11 of its potential returns per unit of risk. Oasis Petroleum is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 5,159 in Oasis Petroleum on August 30, 2024 and sell it today you would earn a total of 342.00 from holding Oasis Petroleum or generate 6.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 69.57% |
| Values | Daily Returns |
GE Aerospace vs. Oasis Petroleum
Performance |
| Timeline |
| GE Aerospace |
| Oasis Petroleum |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
GE Aerospace and Oasis Petroleum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GE Aerospace and Oasis Petroleum
The main advantage of trading using opposite GE Aerospace and Oasis Petroleum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GE Aerospace position performs unexpectedly, Oasis Petroleum 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 Oasis Petroleum will offset losses from the drop in Oasis Petroleum'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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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