Correlation Between General Electric and Roper Technologies,

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

By analyzing existing cross correlation between General Electric and Roper Technologies,, you can compare the effects of market volatilities on General Electric and Roper Technologies, 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 General Electric with a short position of Roper Technologies,. Check out your portfolio center. Please also check ongoing floating volatility patterns of General Electric and Roper Technologies,.

Diversification Opportunities for General Electric and Roper Technologies,

-0.32

Correlation Coefficient

General Electric  Roper Technologies,

Very good diversification

The 3 months correlation between General and Roper is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding General Electric and Roper Technologies, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Roper Technologies, and General Electric 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 General Electric are associated (or correlated) with Roper Technologies,. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Roper Technologies, has no effect on the direction of General Electric i.e., General Electric and Roper Technologies, go up and down completely randomly.

Pair Corralation between General Electric and Roper Technologies,

Assuming the 90 days trading horizon General Electric is expected to generate 2.49 times less return on investment than Roper Technologies,. But when comparing it to its historical volatility, General Electric is 1.01 times less risky than Roper Technologies,. It trades about 0.07 of its potential returns per unit of risk. Roper Technologies, is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  29,630  in Roper Technologies, on October 6, 2024 and sell it today you would earn a total of  3,670  from holding Roper Technologies, or generate 12.39% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	97.44%
Values	Daily Returns

General Electric  vs.  Roper Technologies,

General Electric

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in General Electric are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, General Electric is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Roper Technologies,

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Roper Technologies, are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Roper Technologies, sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with General Electric and Roper Technologies,

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

The idea behind General Electric and Roper Technologies, 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.

Check out your portfolio center.

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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.