Correlation Between GE Aerospace and CATERPILLAR
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By analyzing existing cross correlation between GE Aerospace and CATERPILLAR INC 53, you can compare the effects of market volatilities on GE Aerospace and CATERPILLAR 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 CATERPILLAR. Check out your portfolio center. Please also check ongoing floating volatility patterns of GE Aerospace and CATERPILLAR.
Diversification Opportunities for GE Aerospace and CATERPILLAR
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between GE Aerospace and CATERPILLAR is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding GE Aerospace and CATERPILLAR INC 53 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CATERPILLAR INC 53 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 CATERPILLAR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CATERPILLAR INC 53 has no effect on the direction of GE Aerospace i.e., GE Aerospace and CATERPILLAR go up and down completely randomly.
Pair Corralation between GE Aerospace and CATERPILLAR
Allowing for the 90-day total investment horizon GE Aerospace is expected to generate 2.13 times more return on investment than CATERPILLAR. However, GE Aerospace is 2.13 times more volatile than CATERPILLAR INC 53. It trades about 0.08 of its potential returns per unit of risk. CATERPILLAR INC 53 is currently generating about -0.08 per unit of risk. If you would invest 16,611 in GE Aerospace on September 4, 2024 and sell it today you would earn a total of 1,461 from holding GE Aerospace or generate 8.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 75.0% |
| Values | Daily Returns |
GE Aerospace vs. CATERPILLAR INC 53
Performance |
| Timeline |
| GE Aerospace |
| CATERPILLAR INC 53 |
GE Aerospace and CATERPILLAR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GE Aerospace and CATERPILLAR
The main advantage of trading using opposite GE Aerospace and CATERPILLAR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GE Aerospace position performs unexpectedly, CATERPILLAR 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 CATERPILLAR will offset losses from the drop in CATERPILLAR's long position.| GE Aerospace vs. Illinois Tool Works | GE Aerospace vs. Dover | GE Aerospace vs. Cummins | GE Aerospace vs. Eaton PLC |
| CATERPILLAR vs. The Travelers Companies | CATERPILLAR vs. GE Aerospace | CATERPILLAR vs. Walmart | CATERPILLAR vs. Pfizer Inc |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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