Correlation Between GE Aerospace and Simplify Volt

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

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

Diversification Opportunities for GE Aerospace and Simplify Volt

-0.73

Correlation Coefficient

GE Aerospace  Simplify Volt

Pay attention - limited upside

The 3 months correlation between GE Aerospace and Simplify is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding GE Aerospace and Simplify Volt RoboCar in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Simplify Volt RoboCar 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 Simplify Volt. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Simplify Volt RoboCar has no effect on the direction of GE Aerospace i.e., GE Aerospace and Simplify Volt go up and down completely randomly.

Pair Corralation between GE Aerospace and Simplify Volt

Allowing for the 90-day total investment horizon GE Aerospace is expected to generate 1.49 times less return on investment than Simplify Volt. But when comparing it to its historical volatility, GE Aerospace is 1.64 times less risky than Simplify Volt. It trades about 0.12 of its potential returns per unit of risk. Simplify Volt RoboCar is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  612.00  in Simplify Volt RoboCar on October 4, 2024 and sell it today you would earn a total of  1,773  from holding Simplify Volt RoboCar or generate 289.71% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

GE Aerospace  vs.  Simplify Volt RoboCar

GE Aerospace

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GE Aerospace has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Simplify Volt RoboCar

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Simplify Volt RoboCar are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating basic indicators, Simplify Volt reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with GE Aerospace and Simplify Volt

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

The idea behind GE Aerospace and Simplify Volt RoboCar 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.