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
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between GE Aerospace and Rosinbomb is -0.7. 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 0.11 times more return on investment than Rosinbomb. However, GE Aerospace is 8.73 times less risky than Rosinbomb. It trades about 0.12 of its potential returns per unit of risk. Rosinbomb is currently generating about -0.01 per unit of risk. If you would invest 16,099 in GE Aerospace on September 6, 2024 and sell it today you would earn a total of 2,166 from holding GE Aerospace or generate 13.45% 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
Performance |
Timeline |
GE Aerospace |
Rosinbomb |
GE Aerospace and Rosinbomb Volatility Contrast
Predicted Return Density |
Returns |
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.GE Aerospace vs. Illinois Tool Works | GE Aerospace vs. Dover | GE Aerospace vs. Cummins | GE Aerospace vs. Eaton PLC |
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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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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