Correlation Between Environmmtl Tectonic and GE Aerospace
Can any of the company-specific risk be diversified away by investing in both Environmmtl Tectonic and GE Aerospace 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 Environmmtl Tectonic and GE Aerospace into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Environmmtl Tectonic and GE Aerospace, you can compare the effects of market volatilities on Environmmtl Tectonic and GE Aerospace 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 Environmmtl Tectonic with a short position of GE Aerospace. Check out your portfolio center. Please also check ongoing floating volatility patterns of Environmmtl Tectonic and GE Aerospace.
Diversification Opportunities for Environmmtl Tectonic and GE Aerospace
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between Environmmtl and GE Aerospace is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Environmmtl Tectonic and GE Aerospace in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GE Aerospace and Environmmtl Tectonic 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 Environmmtl Tectonic are associated (or correlated) with GE Aerospace. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GE Aerospace has no effect on the direction of Environmmtl Tectonic i.e., Environmmtl Tectonic and GE Aerospace go up and down completely randomly.
Pair Corralation between Environmmtl Tectonic and GE Aerospace
Given the investment horizon of 90 days Environmmtl Tectonic is expected to generate 3.27 times less return on investment than GE Aerospace. In addition to that, Environmmtl Tectonic is 3.69 times more volatile than GE Aerospace. It trades about 0.03 of its total potential returns per unit of risk. GE Aerospace is currently generating about 0.3 per unit of volatility. If you would invest 8,493 in GE Aerospace on January 20, 2024 and sell it today you would earn a total of 6,801 from holding GE Aerospace or generate 80.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.19% |
| Values | Daily Returns |
Environmmtl Tectonic vs. GE Aerospace
Performance |
| Timeline |
| Environmmtl Tectonic |
| GE Aerospace |
Environmmtl Tectonic and GE Aerospace Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Environmmtl Tectonic and GE Aerospace
The main advantage of trading using opposite Environmmtl Tectonic and GE Aerospace positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Environmmtl Tectonic position performs unexpectedly, GE Aerospace 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 Aerospace will offset losses from the drop in GE Aerospace's long position.| Environmmtl Tectonic vs. V2X Inc | Environmmtl Tectonic vs. National Presto Industries | Environmmtl Tectonic vs. Kaman | Environmmtl Tectonic vs. Woodward |
| GE Aerospace vs. Illinois Tool Works | GE Aerospace vs. Dover | GE Aerospace vs. Cummins | GE Aerospace vs. Eaton PLC |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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