Correlation Between GE Aerospace and Technology One
Can any of the company-specific risk be diversified away by investing in both GE Aerospace and Technology One 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 Technology One into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GE Aerospace and Technology One Limited, you can compare the effects of market volatilities on GE Aerospace and Technology One 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 Technology One. Check out your portfolio center. Please also check ongoing floating volatility patterns of GE Aerospace and Technology One.
Diversification Opportunities for GE Aerospace and Technology One
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between GE Aerospace and Technology is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding GE Aerospace and Technology One Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Technology One 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 Technology One. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Technology One has no effect on the direction of GE Aerospace i.e., GE Aerospace and Technology One go up and down completely randomly.
Pair Corralation between GE Aerospace and Technology One
Allowing for the 90-day total investment horizon GE Aerospace is expected to under-perform the Technology One. But the stock apears to be less risky and, when comparing its historical volatility, GE Aerospace is 4.85 times less risky than Technology One. The stock trades about -0.07 of its potential returns per unit of risk. The Technology One Limited is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 962.00 in Technology One Limited on September 18, 2024 and sell it today you would earn a total of 1,008 from holding Technology One Limited or generate 104.78% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 98.44% |
Values | Daily Returns |
GE Aerospace vs. Technology One Limited
Performance |
Timeline |
GE Aerospace |
Technology One |
GE Aerospace and Technology One Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with GE Aerospace and Technology One
The main advantage of trading using opposite GE Aerospace and Technology One positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GE Aerospace position performs unexpectedly, Technology One 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 Technology One will offset losses from the drop in Technology One's long position.GE Aerospace vs. Illinois Tool Works | ||
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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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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