Correlation Between GE Aerospace and IShares MSCI
Can any of the company-specific risk be diversified away by investing in both GE Aerospace and IShares MSCI 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 IShares MSCI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GE Aerospace and iShares MSCI Global, you can compare the effects of market volatilities on GE Aerospace and IShares MSCI 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 IShares MSCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of GE Aerospace and IShares MSCI.
Diversification Opportunities for GE Aerospace and IShares MSCI
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between GE Aerospace and IShares is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding GE Aerospace and iShares MSCI Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares MSCI Global 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 IShares MSCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares MSCI Global has no effect on the direction of GE Aerospace i.e., GE Aerospace and IShares MSCI go up and down completely randomly.
Pair Corralation between GE Aerospace and IShares MSCI
Allowing for the 90-day total investment horizon GE Aerospace is expected to generate 1.96 times more return on investment than IShares MSCI. However, GE Aerospace is 1.96 times more volatile than iShares MSCI Global. It trades about 0.13 of its potential returns per unit of risk. iShares MSCI Global is currently generating about 0.01 per unit of risk. If you would invest 8,406 in GE Aerospace on August 31, 2024 and sell it today you would earn a total of 9,810 from holding GE Aerospace or generate 116.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
GE Aerospace vs. iShares MSCI Global
Performance |
| Timeline |
| GE Aerospace |
| iShares MSCI Global |
GE Aerospace and IShares MSCI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GE Aerospace and IShares MSCI
The main advantage of trading using opposite GE Aerospace and IShares MSCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GE Aerospace position performs unexpectedly, IShares MSCI 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 IShares MSCI will offset losses from the drop in IShares MSCI's long position.| GE Aerospace vs. Illinois Tool Works | GE Aerospace vs. Dover | GE Aerospace vs. Cummins | GE Aerospace vs. Eaton PLC |
| IShares MSCI vs. Mast Global Battery | IShares MSCI vs. Materials Select Sector | IShares MSCI vs. Vanguard Materials Index | IShares MSCI vs. SPDR SP Metals |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
Other Complementary Tools
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals | |
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency |