Correlation Between GE Aerospace and ALPS REIT

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

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

Diversification Opportunities for GE Aerospace and ALPS REIT

0.51

Correlation Coefficient

GE Aerospace  ALPS REIT

Very weak diversification

The 3 months correlation between GE Aerospace and ALPS is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding GE Aerospace and ALPS REIT Dividend in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ALPS REIT Dividend 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 ALPS REIT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ALPS REIT Dividend has no effect on the direction of GE Aerospace i.e., GE Aerospace and ALPS REIT go up and down completely randomly.

Pair Corralation between GE Aerospace and ALPS REIT

Allowing for the 90-day total investment horizon GE Aerospace is expected to generate 1.64 times more return on investment than ALPS REIT. However, GE Aerospace is 1.64 times more volatile than ALPS REIT Dividend. It trades about 0.2 of its potential returns per unit of risk. ALPS REIT Dividend is currently generating about 0.01 per unit of risk. If you would invest  16,779  in GE Aerospace on December 29, 2024 and sell it today you would earn a total of  3,809  from holding GE Aerospace or generate 22.7% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.39%
Values	Daily Returns

GE Aerospace  vs.  ALPS REIT Dividend

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.

ALPS REIT Dividend

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in ALPS REIT Dividend are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, ALPS REIT is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with GE Aerospace and ALPS REIT

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

The idea behind GE Aerospace and ALPS REIT Dividend 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.