Correlation Between GE Aerospace and Sound Point
Can any of the company-specific risk be diversified away by investing in both GE Aerospace and Sound Point 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 Sound Point into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GE Aerospace and Sound Point Acquisition, you can compare the effects of market volatilities on GE Aerospace and Sound Point 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 Sound Point. Check out your portfolio center. Please also check ongoing floating volatility patterns of GE Aerospace and Sound Point.
Diversification Opportunities for GE Aerospace and Sound Point
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between GE Aerospace and Sound is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding GE Aerospace and Sound Point Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sound Point Acquisition 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 Sound Point. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sound Point Acquisition has no effect on the direction of GE Aerospace i.e., GE Aerospace and Sound Point go up and down completely randomly.
Pair Corralation between GE Aerospace and Sound Point
If you would invest 17,187 in GE Aerospace on October 26, 2024 and sell it today you would earn a total of 2,488 from holding GE Aerospace or generate 14.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 5.26% |
| Values | Daily Returns |
GE Aerospace vs. Sound Point Acquisition
Performance |
| Timeline |
| GE Aerospace |
| Sound Point Acquisition |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
GE Aerospace and Sound Point Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GE Aerospace and Sound Point
The main advantage of trading using opposite GE Aerospace and Sound Point positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GE Aerospace position performs unexpectedly, Sound Point 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 Sound Point will offset losses from the drop in Sound Point's long position.| GE Aerospace vs. Illinois Tool Works | GE Aerospace vs. Dover | GE Aerospace vs. Cummins | GE Aerospace vs. Eaton PLC |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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