Correlation Between GE Vernova and Cheniere Energy
Can any of the company-specific risk be diversified away by investing in both GE Vernova and Cheniere Energy 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 Vernova and Cheniere Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GE Vernova LLC and Cheniere Energy Partners, you can compare the effects of market volatilities on GE Vernova and Cheniere Energy 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 Vernova with a short position of Cheniere Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of GE Vernova and Cheniere Energy.
Diversification Opportunities for GE Vernova and Cheniere Energy
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between GEV and Cheniere is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding GE Vernova LLC and Cheniere Energy Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cheniere Energy Partners and GE Vernova 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 Vernova LLC are associated (or correlated) with Cheniere Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cheniere Energy Partners has no effect on the direction of GE Vernova i.e., GE Vernova and Cheniere Energy go up and down completely randomly.
Pair Corralation between GE Vernova and Cheniere Energy
Considering the 90-day investment horizon GE Vernova LLC is expected to generate 2.16 times more return on investment than Cheniere Energy. However, GE Vernova is 2.16 times more volatile than Cheniere Energy Partners. It trades about 0.2 of its potential returns per unit of risk. Cheniere Energy Partners is currently generating about 0.13 per unit of risk. If you would invest 17,037 in GE Vernova LLC on August 30, 2024 and sell it today you would earn a total of 16,496 from holding GE Vernova LLC or generate 96.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
GE Vernova LLC vs. Cheniere Energy Partners
Performance |
| Timeline |
| GE Vernova LLC |
| Cheniere Energy Partners |
GE Vernova and Cheniere Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GE Vernova and Cheniere Energy
The main advantage of trading using opposite GE Vernova and Cheniere Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GE Vernova position performs unexpectedly, Cheniere Energy 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 Cheniere Energy will offset losses from the drop in Cheniere Energy's long position.| GE Vernova vs. Sweetgreen | GE Vernova vs. Artisan Partners Asset | GE Vernova vs. Dalata Hotel Group | GE Vernova vs. Papaya Growth Opportunity |
| Cheniere Energy vs. Plains All American | Cheniere Energy vs. Genesis Energy LP | Cheniere Energy vs. Hess Midstream Partners | Cheniere Energy vs. Kinder Morgan |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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