Correlation Between GE Aerospace and PACIFIC

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

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

Diversification Opportunities for GE Aerospace and PACIFIC

-0.45

Correlation Coefficient

GE Aerospace  PACIFIC

Very good diversification

The 3 months correlation between GE Aerospace and PACIFIC is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding GE Aerospace and PACIFIC GAS AND in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PACIFIC GAS AND 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 PACIFIC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PACIFIC GAS AND has no effect on the direction of GE Aerospace i.e., GE Aerospace and PACIFIC go up and down completely randomly.

Pair Corralation between GE Aerospace and PACIFIC

Allowing for the 90-day total investment horizon GE Aerospace is expected to generate 8.86 times less return on investment than PACIFIC. But when comparing it to its historical volatility, GE Aerospace is 28.01 times less risky than PACIFIC. It trades about 0.13 of its potential returns per unit of risk. PACIFIC GAS AND is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  9,255  in PACIFIC GAS AND on October 22, 2024 and sell it today you would lose (219.00) from holding PACIFIC GAS AND or give up 2.37% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	89.92%
Values	Daily Returns

GE Aerospace  vs.  PACIFIC GAS AND

GE Aerospace

Risk-Adjusted Performance

3 of 100

Very Weak

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.

PACIFIC GAS AND

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PACIFIC GAS AND has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for PACIFIC GAS AND investors.

Pair Trading with GE Aerospace and PACIFIC

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

The idea behind GE Aerospace and PACIFIC GAS AND 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.