Correlation Between GE Aerospace and ETC 6
Can any of the company-specific risk be diversified away by investing in both GE Aerospace and ETC 6 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 ETC 6 into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GE Aerospace and ETC 6 Meridian, you can compare the effects of market volatilities on GE Aerospace and ETC 6 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 ETC 6. Check out your portfolio center. Please also check ongoing floating volatility patterns of GE Aerospace and ETC 6.
Diversification Opportunities for GE Aerospace and ETC 6
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between GE Aerospace and ETC is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding GE Aerospace and ETC 6 Meridian in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ETC 6 Meridian 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 ETC 6. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ETC 6 Meridian has no effect on the direction of GE Aerospace i.e., GE Aerospace and ETC 6 go up and down completely randomly.
Pair Corralation between GE Aerospace and ETC 6
Allowing for the 90-day total investment horizon GE Aerospace is expected to generate 4.49 times more return on investment than ETC 6. However, GE Aerospace is 4.49 times more volatile than ETC 6 Meridian. It trades about 0.15 of its potential returns per unit of risk. ETC 6 Meridian is currently generating about 0.12 per unit of risk. If you would invest 10,146 in GE Aerospace on November 9, 2024 and sell it today you would earn a total of 10,460 from holding GE Aerospace or generate 103.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
GE Aerospace vs. ETC 6 Meridian
Performance |
| Timeline |
| GE Aerospace |
| ETC 6 Meridian |
GE Aerospace and ETC 6 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GE Aerospace and ETC 6
The main advantage of trading using opposite GE Aerospace and ETC 6 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GE Aerospace position performs unexpectedly, ETC 6 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 ETC 6 will offset losses from the drop in ETC 6's long position.| GE Aerospace vs. Great Western Minerals | GE Aerospace vs. Enterprise Bancorp | GE Aerospace vs. T Rowe Price | GE Aerospace vs. Aviat Networks |
| ETC 6 vs. 6 Meridian Mega | ETC 6 vs. 6 Meridian Low | ETC 6 vs. 6 Meridian Small | ETC 6 vs. Overlay Shares Large |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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