Correlation Between GE Vernova and Ellomay Capital

Can any of the company-specific risk be diversified away by investing in both GE Vernova and Ellomay Capital 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 Ellomay Capital 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 Ellomay Capital, you can compare the effects of market volatilities on GE Vernova and Ellomay Capital 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 Ellomay Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of GE Vernova and Ellomay Capital.

Diversification Opportunities for GE Vernova and Ellomay Capital

0.35

Correlation Coefficient

GE Vernova  Ellomay Capital

Weak diversification

The 3 months correlation between GEV and Ellomay is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding GE Vernova LLC and Ellomay Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ellomay Capital 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 Ellomay Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ellomay Capital has no effect on the direction of GE Vernova i.e., GE Vernova and Ellomay Capital go up and down completely randomly.

Pair Corralation between GE Vernova and Ellomay Capital

Considering the 90-day investment horizon GE Vernova LLC is expected to generate 1.59 times more return on investment than Ellomay Capital. However, GE Vernova is 1.59 times more volatile than Ellomay Capital. It trades about 0.01 of its potential returns per unit of risk. Ellomay Capital is currently generating about 0.0 per unit of risk. If you would invest  33,380  in GE Vernova LLC on December 27, 2024 and sell it today you would lose (1,610) from holding GE Vernova LLC or give up 4.82% of portfolio value over 90 days.

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

GE Vernova LLC  vs.  Ellomay Capital

GE Vernova LLC

Risk-Adjusted Performance

Very Weak

Over the last 90 days GE Vernova LLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable technical and fundamental indicators, GE Vernova is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Ellomay Capital

Risk-Adjusted Performance

Very Weak

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

Pair Trading with GE Vernova and Ellomay Capital

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

The idea behind GE Vernova LLC and Ellomay Capital 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.