Correlation Between GE Aerospace and Level

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

By analyzing existing cross correlation between GE Aerospace and Level 3 Financing, you can compare the effects of market volatilities on GE Aerospace and Level 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 Level. Check out your portfolio center. Please also check ongoing floating volatility patterns of GE Aerospace and Level.

Diversification Opportunities for GE Aerospace and Level

-0.62

Correlation Coefficient

GE Aerospace  Level

Excellent diversification

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

Pair Corralation between GE Aerospace and Level

Allowing for the 90-day total investment horizon GE Aerospace is expected to generate 0.04 times more return on investment than Level. However, GE Aerospace is 27.58 times less risky than Level. It trades about 0.37 of its potential returns per unit of risk. Level 3 Financing is currently generating about -0.08 per unit of risk. If you would invest  16,875  in GE Aerospace on October 22, 2024 and sell it today you would earn a total of  1,410  from holding GE Aerospace or generate 8.36% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	21.05%
Values	Daily Returns

GE Aerospace  vs.  Level 3 Financing

GE Aerospace

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in GE Aerospace are ranked lower than 3 (%) 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.

Level 3 Financing

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Level 3 Financing has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Bond's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for Level 3 Financing investors.

Pair Trading with GE Aerospace and Level

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

The idea behind GE Aerospace and Level 3 Financing 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.