Correlation Between GE Aerospace and PetIQ

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

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

Diversification Opportunities for GE Aerospace and PetIQ

0.0

Correlation Coefficient

GE Aerospace  PetIQ

Pay attention - limited upside

The 3 months correlation between GE Aerospace and PetIQ is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding GE Aerospace and PetIQ Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PetIQ Inc 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 PetIQ. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PetIQ Inc has no effect on the direction of GE Aerospace i.e., GE Aerospace and PetIQ go up and down completely randomly.

Pair Corralation between GE Aerospace and PetIQ

If you would invest  16,843  in GE Aerospace on December 22, 2024 and sell it today you would earn a total of  3,570  from holding GE Aerospace or generate 21.2% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

GE Aerospace  vs.  PetIQ Inc

GE Aerospace

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in GE Aerospace are ranked lower than 15 (%) 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.

PetIQ Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days PetIQ Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, PetIQ is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with GE Aerospace and PetIQ

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

The idea behind GE Aerospace and PetIQ Inc 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.