Correlation Between GE Aerospace and Nabors Energy
Can any of the company-specific risk be diversified away by investing in both GE Aerospace and Nabors Energy 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 Nabors Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GE Aerospace and Nabors Energy Transition, you can compare the effects of market volatilities on GE Aerospace and Nabors Energy 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 Nabors Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of GE Aerospace and Nabors Energy.
Diversification Opportunities for GE Aerospace and Nabors Energy
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between GE Aerospace and Nabors is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding GE Aerospace and Nabors Energy Transition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nabors Energy Transition 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 Nabors Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nabors Energy Transition has no effect on the direction of GE Aerospace i.e., GE Aerospace and Nabors Energy go up and down completely randomly.
Pair Corralation between GE Aerospace and Nabors Energy
Allowing for the 90-day total investment horizon GE Aerospace is expected to generate 4.79 times more return on investment than Nabors Energy. However, GE Aerospace is 4.79 times more volatile than Nabors Energy Transition. It trades about 0.12 of its potential returns per unit of risk. Nabors Energy Transition is currently generating about 0.08 per unit of risk. If you would invest 6,362 in GE Aerospace on October 5, 2024 and sell it today you would earn a total of 10,497 from holding GE Aerospace or generate 165.0% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 26.46% |
Values | Daily Returns |
GE Aerospace vs. Nabors Energy Transition
Performance |
Timeline |
GE Aerospace |
Nabors Energy Transition |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
GE Aerospace and Nabors Energy Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with GE Aerospace and Nabors Energy
The main advantage of trading using opposite GE Aerospace and Nabors Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GE Aerospace position performs unexpectedly, Nabors Energy 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 Nabors Energy will offset losses from the drop in Nabors Energy's long position.GE Aerospace vs. TRI Pointe Homes | GE Aerospace vs. NetScout Systems | GE Aerospace vs. MRC Global | GE Aerospace vs. Alcoa Corp |
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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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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