Correlation Between GE Aerospace and Grayscale Stellar

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

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

Diversification Opportunities for GE Aerospace and Grayscale Stellar

-0.26

Correlation Coefficient

GE Aerospace  Grayscale Stellar

Very good diversification

The 3 months correlation between GE Aerospace and Grayscale is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding GE Aerospace and Grayscale Stellar Lumens in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grayscale Stellar Lumens 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 Grayscale Stellar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grayscale Stellar Lumens has no effect on the direction of GE Aerospace i.e., GE Aerospace and Grayscale Stellar go up and down completely randomly.

Pair Corralation between GE Aerospace and Grayscale Stellar

Allowing for the 90-day total investment horizon GE Aerospace is expected to generate 1.53 times less return on investment than Grayscale Stellar. But when comparing it to its historical volatility, GE Aerospace is 5.23 times less risky than Grayscale Stellar. It trades about 0.47 of its potential returns per unit of risk. Grayscale Stellar Lumens is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  4,007  in Grayscale Stellar Lumens on October 26, 2024 and sell it today you would earn a total of  698.00  from holding Grayscale Stellar Lumens or generate 17.42% return on investment over 90 days.

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

GE Aerospace  vs.  Grayscale Stellar Lumens

GE Aerospace

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in GE Aerospace are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather abnormal technical and fundamental indicators, GE Aerospace exhibited solid returns over the last few months and may actually be approaching a breakup point.

Grayscale Stellar Lumens

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Grayscale Stellar Lumens are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of very inconsistent essential indicators, Grayscale Stellar displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with GE Aerospace and Grayscale Stellar

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

The idea behind GE Aerospace and Grayscale Stellar Lumens 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.