Correlation Between GE Aerospace and 254687FV3

Can any of the company-specific risk be diversified away by investing in both GE Aerospace and 254687FV3 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 254687FV3 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between GE Aerospace and The Walt Disney, you can compare the effects of market volatilities on GE Aerospace and 254687FV3 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 254687FV3. Check out your portfolio center. Please also check ongoing floating volatility patterns of GE Aerospace and 254687FV3.

Diversification Opportunities for GE Aerospace and 254687FV3

-0.03

Correlation Coefficient

GE Aerospace  254687FV3

Good diversification

The 3 months correlation between GE Aerospace and 254687FV3 is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding GE Aerospace and The Walt Disney in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Walt Disney 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 254687FV3. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Walt Disney has no effect on the direction of GE Aerospace i.e., GE Aerospace and 254687FV3 go up and down completely randomly.

Pair Corralation between GE Aerospace and 254687FV3

Allowing for the 90-day total investment horizon GE Aerospace is expected to generate 2.82 times more return on investment than 254687FV3. However, GE Aerospace is 2.82 times more volatile than The Walt Disney. It trades about 0.09 of its potential returns per unit of risk. The Walt Disney is currently generating about -0.07 per unit of risk. If you would invest  16,361  in GE Aerospace on September 5, 2024 and sell it today you would earn a total of  1,711  from holding GE Aerospace or generate 10.46% 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.  The Walt Disney

GE Aerospace

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in GE Aerospace are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather abnormal technical and fundamental indicators, GE Aerospace may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Walt Disney

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days The Walt Disney has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 254687FV3 is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with GE Aerospace and 254687FV3

The main advantage of trading using opposite GE Aerospace and 254687FV3 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GE Aerospace position performs unexpectedly, 254687FV3 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 254687FV3 will offset losses from the drop in 254687FV3's long position.

The idea behind GE Aerospace and The Walt Disney 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.