Correlation Between GE Aerospace and Global X

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

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

Diversification Opportunities for GE Aerospace and Global X

-0.38

Correlation Coefficient

GE Aerospace  Global X

Very good diversification

The 3 months correlation between GE Aerospace and Global is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding GE Aerospace and Global X Funds in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X Funds 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 Global X. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global X Funds has no effect on the direction of GE Aerospace i.e., GE Aerospace and Global X go up and down completely randomly.

Pair Corralation between GE Aerospace and Global X

Allowing for the 90-day total investment horizon GE Aerospace is expected to generate 1.72 times more return on investment than Global X. However, GE Aerospace is 1.72 times more volatile than Global X Funds. It trades about 0.13 of its potential returns per unit of risk. Global X Funds is currently generating about 0.1 per unit of risk. If you would invest  6,828  in GE Aerospace on October 23, 2024 and sell it today you would earn a total of  11,828  from holding GE Aerospace or generate 173.23% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.79%
Values	Daily Returns

GE Aerospace  vs.  Global X Funds

GE Aerospace

Risk-Adjusted Performance

1 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in GE Aerospace are ranked lower than 1 (%) 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.

Global X Funds

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Global X Funds are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable essential indicators, Global X is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with GE Aerospace and Global X

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

The idea behind GE Aerospace and Global X Funds 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.