Correlation Between GE Aerospace and Schindler Holding
Can any of the company-specific risk be diversified away by investing in both GE Aerospace and Schindler Holding 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 Schindler Holding into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GE Aerospace and Schindler Holding AG, you can compare the effects of market volatilities on GE Aerospace and Schindler Holding 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 Schindler Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of GE Aerospace and Schindler Holding.
Diversification Opportunities for GE Aerospace and Schindler Holding
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between GE Aerospace and Schindler is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding GE Aerospace and Schindler Holding AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Schindler Holding 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 Schindler Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Schindler Holding has no effect on the direction of GE Aerospace i.e., GE Aerospace and Schindler Holding go up and down completely randomly.
Pair Corralation between GE Aerospace and Schindler Holding
Allowing for the 90-day total investment horizon GE Aerospace is expected to generate 0.79 times more return on investment than Schindler Holding. However, GE Aerospace is 1.26 times less risky than Schindler Holding. It trades about 0.16 of its potential returns per unit of risk. Schindler Holding AG is currently generating about 0.06 per unit of risk. If you would invest 5,118 in GE Aerospace on September 3, 2024 and sell it today you would earn a total of 12,926 from holding GE Aerospace or generate 252.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 72.93% |
| Values | Daily Returns |
GE Aerospace vs. Schindler Holding AG
Performance |
| Timeline |
| GE Aerospace |
| Schindler Holding |
GE Aerospace and Schindler Holding Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GE Aerospace and Schindler Holding
The main advantage of trading using opposite GE Aerospace and Schindler Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GE Aerospace position performs unexpectedly, Schindler Holding 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 Schindler Holding will offset losses from the drop in Schindler Holding's long position.| GE Aerospace vs. Illinois Tool Works | GE Aerospace vs. Dover | GE Aerospace vs. Cummins | GE Aerospace vs. Eaton PLC |
| Schindler Holding vs. Rockwell Automation | Schindler Holding vs. Parker Hannifin | Schindler Holding vs. Ingersoll Rand | Schindler Holding vs. Dover |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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