Correlation Between GE Aerospace and Rosinbomb

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

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

Diversification Opportunities for GE Aerospace and Rosinbomb

-0.67

Correlation Coefficient

GE Aerospace  Rosinbomb

Excellent diversification

The 3 months correlation between GE Aerospace and Rosinbomb is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding GE Aerospace and Rosinbomb in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rosinbomb 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 Rosinbomb. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rosinbomb has no effect on the direction of GE Aerospace i.e., GE Aerospace and Rosinbomb go up and down completely randomly.

Pair Corralation between GE Aerospace and Rosinbomb

Allowing for the 90-day total investment horizon GE Aerospace is expected to generate 0.12 times more return on investment than Rosinbomb. However, GE Aerospace is 8.28 times less risky than Rosinbomb. It trades about 0.05 of its potential returns per unit of risk. Rosinbomb is currently generating about -0.01 per unit of risk. If you would invest  16,511  in GE Aerospace on September 7, 2024 and sell it today you would earn a total of  780.00  from holding GE Aerospace or generate 4.72% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

GE Aerospace  vs.  Rosinbomb

GE Aerospace

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in GE Aerospace are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, GE Aerospace is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Rosinbomb

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Rosinbomb has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with GE Aerospace and Rosinbomb

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

The idea behind GE Aerospace and Rosinbomb 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.