Correlation Between General Electric and Charter Communications
Can any of the company-specific risk be diversified away by investing in both General Electric and Charter Communications 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 General Electric and Charter Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Electric and Charter Communications, you can compare the effects of market volatilities on General Electric and Charter Communications 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 General Electric with a short position of Charter Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of General Electric and Charter Communications.
Diversification Opportunities for General Electric and Charter Communications
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between General and Charter is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding General Electric and Charter Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Charter Communications and General Electric 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 General Electric are associated (or correlated) with Charter Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Charter Communications has no effect on the direction of General Electric i.e., General Electric and Charter Communications go up and down completely randomly.
Pair Corralation between General Electric and Charter Communications
Assuming the 90 days trading horizon General Electric is expected to under-perform the Charter Communications. But the stock apears to be less risky and, when comparing its historical volatility, General Electric is 1.34 times less risky than Charter Communications. The stock trades about -0.09 of its potential returns per unit of risk. The Charter Communications is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 3,776 in Charter Communications on September 13, 2024 and sell it today you would lose (24.00) from holding Charter Communications or give up 0.64% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
General Electric vs. Charter Communications
Performance |
| Timeline |
| General Electric |
| Charter Communications |
General Electric and Charter Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with General Electric and Charter Communications
The main advantage of trading using opposite General Electric and Charter Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if General Electric position performs unexpectedly, Charter Communications 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 Charter Communications will offset losses from the drop in Charter Communications' long position.| General Electric vs. Charter Communications | General Electric vs. Verizon Communications | General Electric vs. HDFC Bank Limited | General Electric vs. Ameriprise Financial |
| Charter Communications vs. Comcast | Charter Communications vs. Warner Music Group | Charter Communications vs. Bemobi Mobile Tech |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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