Correlation Between GE Aerospace and Vista Outdoor

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

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

Diversification Opportunities for GE Aerospace and Vista Outdoor

-0.41

Correlation Coefficient

GE Aerospace  Vista Outdoor

Very good diversification

The 3 months correlation between GE Aerospace and Vista is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding GE Aerospace and Vista Outdoor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vista Outdoor 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 Vista Outdoor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vista Outdoor has no effect on the direction of GE Aerospace i.e., GE Aerospace and Vista Outdoor go up and down completely randomly.

Pair Corralation between GE Aerospace and Vista Outdoor

If you would invest  17,121  in GE Aerospace on October 25, 2024 and sell it today you would earn a total of  2,953  from holding GE Aerospace or generate 17.25% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	5.26%
Values	Daily Returns

GE Aerospace  vs.  Vista Outdoor

GE Aerospace

Risk-Adjusted Performance

8 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in GE Aerospace are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating technical and fundamental indicators, GE Aerospace exhibited solid returns over the last few months and may actually be approaching a breakup point.

Vista Outdoor

Risk-Adjusted Performance

0 of 100

Solid

Over the last 90 days Vista Outdoor has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Vista Outdoor is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with GE Aerospace and Vista Outdoor

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

The idea behind GE Aerospace and Vista Outdoor 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.