Correlation Between TRON and GE HealthCare
Can any of the company-specific risk be diversified away by investing in both TRON and GE HealthCare 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 TRON and GE HealthCare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TRON and GE HealthCare Technologies, you can compare the effects of market volatilities on TRON and GE HealthCare 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 TRON with a short position of GE HealthCare. Check out your portfolio center. Please also check ongoing floating volatility patterns of TRON and GE HealthCare.
Diversification Opportunities for TRON and GE HealthCare
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between TRON and GEHC is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding TRON and GE HealthCare Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GE HealthCare Techno and TRON 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 TRON are associated (or correlated) with GE HealthCare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GE HealthCare Techno has no effect on the direction of TRON i.e., TRON and GE HealthCare go up and down completely randomly.
Pair Corralation between TRON and GE HealthCare
Assuming the 90 days trading horizon TRON is expected to under-perform the GE HealthCare. In addition to that, TRON is 2.65 times more volatile than GE HealthCare Technologies. It trades about -0.08 of its total potential returns per unit of risk. GE HealthCare Technologies is currently generating about 0.47 per unit of volatility. If you would invest 7,815 in GE HealthCare Technologies on November 1, 2024 and sell it today you would earn a total of 1,140 from holding GE HealthCare Technologies or generate 14.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
TRON vs. GE HealthCare Technologies
Performance |
| Timeline |
| TRON |
| GE HealthCare Techno |
TRON and GE HealthCare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TRON and GE HealthCare
The main advantage of trading using opposite TRON and GE HealthCare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TRON position performs unexpectedly, GE HealthCare 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 HealthCare will offset losses from the drop in GE HealthCare's long position.The idea behind TRON and GE HealthCare Technologies pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| GE HealthCare vs. Teladoc | GE HealthCare vs. Veeva Systems Class | GE HealthCare vs. 10X Genomics | GE HealthCare vs. Progyny |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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