Correlation Between GE Vernova and Pure Cycle

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

Diversification Opportunities for GE Vernova and Pure Cycle

-0.55

Correlation Coefficient

GE Vernova  Pure Cycle

Excellent diversification

The 3 months correlation between GEV and Pure is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding GE Vernova LLC and Pure Cycle in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pure Cycle 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 Pure Cycle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pure Cycle has no effect on the direction of GE Vernova i.e., GE Vernova and Pure Cycle go up and down completely randomly.

Pair Corralation between GE Vernova and Pure Cycle

Considering the 90-day investment horizon GE Vernova LLC is expected to generate 1.99 times more return on investment than Pure Cycle. However, GE Vernova is 1.99 times more volatile than Pure Cycle. It trades about 0.03 of its potential returns per unit of risk. Pure Cycle is currently generating about -0.16 per unit of risk. If you would invest  33,387  in GE Vernova LLC on November 28, 2024 and sell it today you would earn a total of  517.00  from holding GE Vernova LLC or generate 1.55% return on investment over 90 days.

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

GE Vernova LLC  vs.  Pure Cycle

GE Vernova LLC

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in GE Vernova LLC are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak technical and fundamental indicators, GE Vernova may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Pure Cycle

Risk-Adjusted Performance

Very Weak

Over the last 90 days Pure Cycle has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in March 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with GE Vernova and Pure Cycle

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

The idea behind GE Vernova LLC and Pure Cycle 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.