Correlation Between GE Aerospace and Syntax

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

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

Diversification Opportunities for GE Aerospace and Syntax

-0.62

Correlation Coefficient

GE Aerospace  Syntax

Excellent diversification

The 3 months correlation between GE Aerospace and Syntax is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding GE Aerospace and Syntax in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Syntax 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 Syntax. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Syntax has no effect on the direction of GE Aerospace i.e., GE Aerospace and Syntax go up and down completely randomly.

Pair Corralation between GE Aerospace and Syntax

If you would invest  5,089  in Syntax on October 21, 2024 and sell it today you would earn a total of  0.00  from holding Syntax or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	1.61%
Values	Daily Returns

GE Aerospace  vs.  Syntax

GE Aerospace

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GE Aerospace has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Syntax

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Syntax has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Syntax is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with GE Aerospace and Syntax

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

The idea behind GE Aerospace and Syntax 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.