Correlation Between Primo Brands and GE Vernova

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

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

Diversification Opportunities for Primo Brands and GE Vernova

0.28

Correlation Coefficient

Primo Brands  GE Vernova

Modest diversification

The 3 months correlation between Primo and GEV is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Primo Brands and GE Vernova LLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GE Vernova LLC and Primo Brands 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 Primo Brands are associated (or correlated) with GE Vernova. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GE Vernova LLC has no effect on the direction of Primo Brands i.e., Primo Brands and GE Vernova go up and down completely randomly.

Pair Corralation between Primo Brands and GE Vernova

Given the investment horizon of 90 days Primo Brands is expected to generate 0.37 times more return on investment than GE Vernova. However, Primo Brands is 2.71 times less risky than GE Vernova. It trades about 0.06 of its potential returns per unit of risk. GE Vernova LLC is currently generating about 0.01 per unit of risk. If you would invest  3,037  in Primo Brands on December 19, 2024 and sell it today you would earn a total of  145.00  from holding Primo Brands or generate 4.77% return on investment over 90 days.

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

Primo Brands  vs.  GE Vernova LLC

Primo Brands

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Primo Brands are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong primary indicators, Primo Brands is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

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 recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Primo Brands and GE Vernova

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

The idea behind Primo Brands and GE Vernova LLC 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.