Correlation Between GE Aerospace and Live Oak

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

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

Diversification Opportunities for GE Aerospace and Live Oak

-0.16

Correlation Coefficient

GE Aerospace  Live Oak

Good diversification

The 3 months correlation between GE Aerospace and Live is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding GE Aerospace and Live Oak Crestview in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Live Oak Crestview 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 Live Oak. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Live Oak Crestview has no effect on the direction of GE Aerospace i.e., GE Aerospace and Live Oak go up and down completely randomly.

Pair Corralation between GE Aerospace and Live Oak

If you would invest  17,507  in GE Aerospace on October 27, 2024 and sell it today you would earn a total of  2,168  from holding GE Aerospace or generate 12.38% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	1.67%
Values	Daily Returns

GE Aerospace  vs.  Live Oak Crestview

GE Aerospace

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in GE Aerospace are ranked lower than 8 (%) 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.

Live Oak Crestview

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Live Oak Crestview has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, Live Oak is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with GE Aerospace and Live Oak

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

The idea behind GE Aerospace and Live Oak Crestview 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 Stocks Directory module to find actively traded stocks across global markets.