Correlation Between BBB Foods and GE Vernova
Can any of the company-specific risk be diversified away by investing in both BBB Foods and GE Vernova 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 BBB Foods and GE Vernova into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BBB Foods and GE Vernova LLC, you can compare the effects of market volatilities on BBB Foods and GE Vernova 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 BBB Foods with a short position of GE Vernova. Check out your portfolio center. Please also check ongoing floating volatility patterns of BBB Foods and GE Vernova.
Diversification Opportunities for BBB Foods and GE Vernova
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between BBB and GEV is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding BBB Foods and GE Vernova LLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GE Vernova LLC and BBB Foods 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 BBB Foods are associated (or correlated) with GE Vernova. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GE Vernova LLC has no effect on the direction of BBB Foods i.e., BBB Foods and GE Vernova go up and down completely randomly.
Pair Corralation between BBB Foods and GE Vernova
Given the investment horizon of 90 days BBB Foods is expected to under-perform the GE Vernova. But the stock apears to be less risky and, when comparing its historical volatility, BBB Foods is 1.02 times less risky than GE Vernova. The stock trades about -0.14 of its potential returns per unit of risk. The GE Vernova LLC is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 29,546 in GE Vernova LLC on September 4, 2024 and sell it today you would earn a total of 3,646 from holding GE Vernova LLC or generate 12.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BBB Foods vs. GE Vernova LLC
Performance |
| Timeline |
| BBB Foods |
| GE Vernova LLC |
BBB Foods and GE Vernova Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BBB Foods and GE Vernova
The main advantage of trading using opposite BBB Foods and GE Vernova positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BBB Foods position performs unexpectedly, GE Vernova 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 GE Vernova will offset losses from the drop in GE Vernova's long position.| BBB Foods vs. Nascent Wine | BBB Foods vs. Vodka Brands Corp | BBB Foods vs. Brandywine Realty Trust | BBB Foods vs. SBM Offshore NV |
| GE Vernova vs. Natural Alternatives International | GE Vernova vs. Turning Point Brands | GE Vernova vs. BBB Foods | GE Vernova vs. Ispire Technology Common |
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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