Correlation Between GE Vernova and Western Midstream

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

Diversification Opportunities for GE Vernova and Western Midstream

0.32

Correlation Coefficient

GE Vernova  Western Midstream

Weak diversification

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

Pair Corralation between GE Vernova and Western Midstream

Considering the 90-day investment horizon GE Vernova is expected to generate 1.86 times less return on investment than Western Midstream. In addition to that, GE Vernova is 2.77 times more volatile than Western Midstream Partners. It trades about 0.02 of its total potential returns per unit of risk. Western Midstream Partners is currently generating about 0.08 per unit of volatility. If you would invest  3,819  in Western Midstream Partners on December 26, 2024 and sell it today you would earn a total of  300.00  from holding Western Midstream Partners or generate 7.86% return on investment over 90 days.

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

GE Vernova LLC  vs.  Western Midstream Partners

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 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable technical and fundamental indicators, GE Vernova is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Western Midstream

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Western Midstream Partners are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak technical and fundamental indicators, Western Midstream may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with GE Vernova and Western Midstream

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

The idea behind GE Vernova LLC and Western Midstream Partners 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.