Correlation Between GE Aerospace and Equitable

Can any of the company-specific risk be diversified away by investing in both GE Aerospace and Equitable 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 Equitable into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between GE Aerospace and Equitable Group, you can compare the effects of market volatilities on GE Aerospace and Equitable 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 Equitable. Check out your portfolio center. Please also check ongoing floating volatility patterns of GE Aerospace and Equitable.

Diversification Opportunities for GE Aerospace and Equitable

0.71

Correlation Coefficient

GE Aerospace  Equitable

Poor diversification

The 3 months correlation between GE Aerospace and Equitable is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding GE Aerospace and Equitable Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Equitable Group 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 Equitable. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Equitable Group has no effect on the direction of GE Aerospace i.e., GE Aerospace and Equitable go up and down completely randomly.

Pair Corralation between GE Aerospace and Equitable

Allowing for the 90-day total investment horizon GE Aerospace is expected to generate 0.55 times more return on investment than Equitable. However, GE Aerospace is 1.81 times less risky than Equitable. It trades about 0.04 of its potential returns per unit of risk. Equitable Group is currently generating about 0.02 per unit of risk. If you would invest  17,099  in GE Aerospace on October 11, 2024 and sell it today you would earn a total of  190.00  from holding GE Aerospace or generate 1.11% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.24%
Values	Daily Returns

GE Aerospace  vs.  Equitable Group

GE Aerospace

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GE Aerospace has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Equitable Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Equitable Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Equitable is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with GE Aerospace and Equitable

The main advantage of trading using opposite GE Aerospace and Equitable positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GE Aerospace position performs unexpectedly, Equitable 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 Equitable will offset losses from the drop in Equitable's long position.

The idea behind GE Aerospace and Equitable Group 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.

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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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.