Correlation Between GE Aerospace and Wilton Resources
Can any of the company-specific risk be diversified away by investing in both GE Aerospace and Wilton Resources 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 Wilton Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GE Aerospace and Wilton Resources, you can compare the effects of market volatilities on GE Aerospace and Wilton Resources 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 Wilton Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of GE Aerospace and Wilton Resources.
Diversification Opportunities for GE Aerospace and Wilton Resources
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between GE Aerospace and Wilton is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding GE Aerospace and Wilton Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wilton Resources 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 Wilton Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wilton Resources has no effect on the direction of GE Aerospace i.e., GE Aerospace and Wilton Resources go up and down completely randomly.
Pair Corralation between GE Aerospace and Wilton Resources
Allowing for the 90-day total investment horizon GE Aerospace is expected to under-perform the Wilton Resources. But the stock apears to be less risky and, when comparing its historical volatility, GE Aerospace is 3.64 times less risky than Wilton Resources. The stock trades about -0.25 of its potential returns per unit of risk. The Wilton Resources is currently generating about 0.32 of returns per unit of risk over similar time horizon. If you would invest 37.00 in Wilton Resources on September 14, 2024 and sell it today you would earn a total of 19.00 from holding Wilton Resources or generate 51.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
GE Aerospace vs. Wilton Resources
Performance |
| Timeline |
| GE Aerospace |
| Wilton Resources |
GE Aerospace and Wilton Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GE Aerospace and Wilton Resources
The main advantage of trading using opposite GE Aerospace and Wilton Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GE Aerospace position performs unexpectedly, Wilton Resources 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 Wilton Resources will offset losses from the drop in Wilton Resources' long position.| GE Aerospace vs. Illinois Tool Works | GE Aerospace vs. Dover | GE Aerospace vs. Cummins | GE Aerospace vs. Eaton PLC |
| Wilton Resources vs. Santa Fe Petroleum | Wilton Resources vs. Liberty Energy Corp | Wilton Resources vs. Rodinia Oil Corp | Wilton Resources vs. Mountainview Energy |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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