Correlation Between GE Aerospace and 260543CK7
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By analyzing existing cross correlation between GE Aerospace and DOW CHEM 425, you can compare the effects of market volatilities on GE Aerospace and 260543CK7 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 260543CK7. Check out your portfolio center. Please also check ongoing floating volatility patterns of GE Aerospace and 260543CK7.
Diversification Opportunities for GE Aerospace and 260543CK7
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between GE Aerospace and 260543CK7 is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding GE Aerospace and DOW CHEM 425 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DOW CHEM 425 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 260543CK7. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DOW CHEM 425 has no effect on the direction of GE Aerospace i.e., GE Aerospace and 260543CK7 go up and down completely randomly.
Pair Corralation between GE Aerospace and 260543CK7
Allowing for the 90-day total investment horizon GE Aerospace is expected to generate 3.04 times more return on investment than 260543CK7. However, GE Aerospace is 3.04 times more volatile than DOW CHEM 425. It trades about 0.1 of its potential returns per unit of risk. DOW CHEM 425 is currently generating about -0.04 per unit of risk. If you would invest 16,397 in GE Aerospace on September 2, 2024 and sell it today you would earn a total of 1,819 from holding GE Aerospace or generate 11.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 92.19% |
| Values | Daily Returns |
GE Aerospace vs. DOW CHEM 425
Performance |
| Timeline |
| GE Aerospace |
| DOW CHEM 425 |
GE Aerospace and 260543CK7 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GE Aerospace and 260543CK7
The main advantage of trading using opposite GE Aerospace and 260543CK7 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GE Aerospace position performs unexpectedly, 260543CK7 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 260543CK7 will offset losses from the drop in 260543CK7's long position.| GE Aerospace vs. Illinois Tool Works | GE Aerospace vs. Dover | GE Aerospace vs. Cummins | GE Aerospace vs. Eaton PLC |
| 260543CK7 vs. AEP TEX INC | 260543CK7 vs. US BANK NATIONAL | 260543CK7 vs. Bank of America | 260543CK7 vs. GE Aerospace |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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