Correlation Between GE Vernova and American Healthcare

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

By analyzing existing cross correlation between GE Vernova LLC and American Healthcare REIT,, you can compare the effects of market volatilities on GE Vernova and American Healthcare 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 Vernova with a short position of American Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of GE Vernova and American Healthcare.

Diversification Opportunities for GE Vernova and American Healthcare

0.83

Correlation Coefficient

GE Vernova  American Healthcare

Very poor diversification

The 3 months correlation between GEV and American is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding GE Vernova LLC and American Healthcare REIT, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Healthcare REIT, and GE Vernova 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 Vernova LLC are associated (or correlated) with American Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Healthcare REIT, has no effect on the direction of GE Vernova i.e., GE Vernova and American Healthcare go up and down completely randomly.

Pair Corralation between GE Vernova and American Healthcare

Considering the 90-day investment horizon GE Vernova LLC is expected to generate 1.82 times more return on investment than American Healthcare. However, GE Vernova is 1.82 times more volatile than American Healthcare REIT,. It trades about 0.18 of its potential returns per unit of risk. American Healthcare REIT, is currently generating about 0.23 per unit of risk. If you would invest  13,125  in GE Vernova LLC on September 13, 2024 and sell it today you would earn a total of  19,866  from holding GE Vernova LLC or generate 151.36% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	84.19%
Values	Daily Returns

GE Vernova LLC  vs.  American Healthcare REIT,

GE Vernova LLC

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in GE Vernova LLC are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak technical and fundamental indicators, GE Vernova showed solid returns over the last few months and may actually be approaching a breakup point.

American Healthcare REIT,

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in American Healthcare REIT, are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak technical indicators, American Healthcare reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with GE Vernova and American Healthcare

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

The idea behind GE Vernova LLC and American Healthcare REIT, 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.