Correlation Between Verde Clean and GE Vernova

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

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

Diversification Opportunities for Verde Clean and GE Vernova

-0.34

Correlation Coefficient

Verde Clean  GE Vernova

Very good diversification

The 3 months correlation between Verde and GEV is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Verde Clean Fuels 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 Verde Clean 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 Verde Clean Fuels 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 Verde Clean i.e., Verde Clean and GE Vernova go up and down completely randomly.

Pair Corralation between Verde Clean and GE Vernova

Given the investment horizon of 90 days Verde Clean Fuels is expected to under-perform the GE Vernova. But the stock apears to be less risky and, when comparing its historical volatility, Verde Clean Fuels is 1.3 times less risky than GE Vernova. The stock trades about -0.03 of its potential returns per unit of risk. The GE Vernova LLC is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  33,387  in GE Vernova LLC on November 28, 2024 and sell it today you would lose (1,618) from holding GE Vernova LLC or give up 4.85% of portfolio value over 90 days.

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

Verde Clean Fuels  vs.  GE Vernova LLC

Verde Clean Fuels

Risk-Adjusted Performance

Very Weak

Over the last 90 days Verde Clean Fuels has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Verde Clean is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private 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 Verde Clean and GE Vernova

The main advantage of trading using opposite Verde Clean and GE Vernova positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Verde Clean 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 Verde Clean Fuels 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.