Correlation Between Rocky Mountain and GE Vernova

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

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

Diversification Opportunities for Rocky Mountain and GE Vernova

-0.61

Correlation Coefficient

Rocky Mountain  GE Vernova

Excellent diversification

The 3 months correlation between Rocky and GEV is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Rocky Mountain Chocolate 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 Rocky Mountain 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 Rocky Mountain Chocolate 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 Rocky Mountain i.e., Rocky Mountain and GE Vernova go up and down completely randomly.

Pair Corralation between Rocky Mountain and GE Vernova

Given the investment horizon of 90 days Rocky Mountain Chocolate is expected to under-perform the GE Vernova. In addition to that, Rocky Mountain is 1.12 times more volatile than GE Vernova LLC. It trades about -0.04 of its total potential returns per unit of risk. GE Vernova LLC is currently generating about 0.2 per unit of volatility. If you would invest  13,115  in GE Vernova LLC on October 26, 2024 and sell it today you would earn a total of  28,934  from holding GE Vernova LLC or generate 220.62% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	42.11%
Values	Daily Returns

Rocky Mountain Chocolate  vs.  GE Vernova LLC

Rocky Mountain Chocolate

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Rocky Mountain Chocolate has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's fundamental indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

GE Vernova LLC

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in GE Vernova LLC are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak technical and fundamental indicators, GE Vernova showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Rocky Mountain and GE Vernova

The main advantage of trading using opposite Rocky Mountain and GE Vernova positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rocky Mountain 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 Rocky Mountain Chocolate 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 CEOs Directory module to screen CEOs from public companies around the world.