Correlation Between GE Aerospace and Safe Pro

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

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

Diversification Opportunities for GE Aerospace and Safe Pro

-0.37

Correlation Coefficient

GE Aerospace  Safe Pro

Very good diversification

The 3 months correlation between GE Aerospace and Safe is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding GE Aerospace and Safe Pro Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Safe Pro Group 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 Safe Pro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Safe Pro Group has no effect on the direction of GE Aerospace i.e., GE Aerospace and Safe Pro go up and down completely randomly.

Pair Corralation between GE Aerospace and Safe Pro

Allowing for the 90-day total investment horizon GE Aerospace is expected to generate 37.02 times less return on investment than Safe Pro. But when comparing it to its historical volatility, GE Aerospace is 7.31 times less risky than Safe Pro. It trades about 0.03 of its potential returns per unit of risk. Safe Pro Group is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  194.00  in Safe Pro Group on October 24, 2024 and sell it today you would earn a total of  164.00  from holding Safe Pro Group or generate 84.54% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

GE Aerospace  vs.  Safe Pro Group

GE Aerospace

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in GE Aerospace are ranked lower than 2 (%) 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.

Safe Pro Group

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Safe Pro Group are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak basic indicators, Safe Pro demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with GE Aerospace and Safe Pro

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

The idea behind GE Aerospace and Safe Pro Group 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.