Correlation Between GE Aerospace and Fa529 If

Can any of the company-specific risk be diversified away by investing in both GE Aerospace and Fa529 If 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 Fa529 If into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between GE Aerospace and Fa529 If Pt, you can compare the effects of market volatilities on GE Aerospace and Fa529 If 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 Fa529 If. Check out your portfolio center. Please also check ongoing floating volatility patterns of GE Aerospace and Fa529 If.

Diversification Opportunities for GE Aerospace and Fa529 If

0.68

Correlation Coefficient

GE Aerospace  Fa529 If

Poor diversification

The 3 months correlation between GE Aerospace and Fa529 is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding GE Aerospace and Fa529 If Pt in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fa529 If Pt 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 Fa529 If. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fa529 If Pt has no effect on the direction of GE Aerospace i.e., GE Aerospace and Fa529 If go up and down completely randomly.

Pair Corralation between GE Aerospace and Fa529 If

Allowing for the 90-day total investment horizon GE Aerospace is expected to under-perform the Fa529 If. In addition to that, GE Aerospace is 8.95 times more volatile than Fa529 If Pt. It trades about -0.19 of its total potential returns per unit of risk. Fa529 If Pt is currently generating about -0.42 per unit of volatility. If you would invest  1,615  in Fa529 If Pt on October 5, 2024 and sell it today you would lose (30.00) from holding Fa529 If Pt or give up 1.86% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

GE Aerospace  vs.  Fa529 If Pt

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 inconsistent 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.

Fa529 If Pt

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fa529 If Pt has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Fa529 If is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with GE Aerospace and Fa529 If

The main advantage of trading using opposite GE Aerospace and Fa529 If positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GE Aerospace position performs unexpectedly, Fa529 If 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 Fa529 If will offset losses from the drop in Fa529 If's long position.

The idea behind GE Aerospace and Fa529 If Pt 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.

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 Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.