Correlation Between GE Aerospace and Growth Fund
Can any of the company-specific risk be diversified away by investing in both GE Aerospace and Growth Fund 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 Growth Fund into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GE Aerospace and Growth Fund A, you can compare the effects of market volatilities on GE Aerospace and Growth Fund 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 Growth Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of GE Aerospace and Growth Fund.
Diversification Opportunities for GE Aerospace and Growth Fund
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between GE Aerospace and Growth is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding GE Aerospace and Growth Fund A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Growth Fund A 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 Growth Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Growth Fund A has no effect on the direction of GE Aerospace i.e., GE Aerospace and Growth Fund go up and down completely randomly.
Pair Corralation between GE Aerospace and Growth Fund
Allowing for the 90-day total investment horizon GE Aerospace is expected to under-perform the Growth Fund. In addition to that, GE Aerospace is 1.1 times more volatile than Growth Fund A. It trades about -0.18 of its total potential returns per unit of risk. Growth Fund A is currently generating about 0.04 per unit of volatility. If you would invest 5,595 in Growth Fund A on September 19, 2024 and sell it today you would earn a total of 68.00 from holding Growth Fund A or generate 1.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
GE Aerospace vs. Growth Fund A
Performance |
| Timeline |
| GE Aerospace |
| Growth Fund A |
GE Aerospace and Growth Fund Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GE Aerospace and Growth Fund
The main advantage of trading using opposite GE Aerospace and Growth Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GE Aerospace position performs unexpectedly, Growth Fund 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 Growth Fund will offset losses from the drop in Growth Fund's long position.| GE Aerospace vs. Illinois Tool Works | GE Aerospace vs. Dover | GE Aerospace vs. Cummins | GE Aerospace vs. Eaton PLC |
| Growth Fund vs. Cmg Ultra Short | Growth Fund vs. Astor Longshort Fund | Growth Fund vs. Blackrock Short Term Inflat Protected | Growth Fund vs. Lord Abbett Short |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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