Correlation Between Pure Storage, and General Electric

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

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

Diversification Opportunities for Pure Storage, and General Electric

-0.19

Correlation Coefficient

Pure Storage,  General Electric

Good diversification

The 3 months correlation between Pure and General is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Pure Storage, and General Electric in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on General Electric and Pure Storage, 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 Pure Storage, are associated (or correlated) with General Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of General Electric has no effect on the direction of Pure Storage, i.e., Pure Storage, and General Electric go up and down completely randomly.

Pair Corralation between Pure Storage, and General Electric

Assuming the 90 days trading horizon Pure Storage, is expected to under-perform the General Electric. In addition to that, Pure Storage, is 1.68 times more volatile than General Electric. It trades about -0.16 of its total potential returns per unit of risk. General Electric is currently generating about 0.11 per unit of volatility. If you would invest  104,426  in General Electric on December 23, 2024 and sell it today you would earn a total of  11,574  from holding General Electric or generate 11.08% return on investment over 90 days.

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

Pure Storage,  vs.  General Electric

Pure Storage,

Risk-Adjusted Performance

Very Weak

Over the last 90 days Pure Storage, has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

General Electric

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in General Electric are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, General Electric may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Pure Storage, and General Electric

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

The idea behind Pure Storage, and General Electric 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.