Correlation Between GE Aerospace and Baker Boyer

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

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

Diversification Opportunities for GE Aerospace and Baker Boyer

-0.86

Correlation Coefficient

GE Aerospace  Baker Boyer

Pay attention - limited upside

The 3 months correlation between GE Aerospace and Baker is -0.86. Overlapping area represents the amount of risk that can be diversified away by holding GE Aerospace and Baker Boyer Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baker Boyer Bancorp and GE Aerospace 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 GE Aerospace are associated (or correlated) with Baker Boyer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baker Boyer Bancorp has no effect on the direction of GE Aerospace i.e., GE Aerospace and Baker Boyer go up and down completely randomly.

Pair Corralation between GE Aerospace and Baker Boyer

Allowing for the 90-day total investment horizon GE Aerospace is expected to generate 1.75 times more return on investment than Baker Boyer. However, GE Aerospace is 1.75 times more volatile than Baker Boyer Bancorp. It trades about 0.21 of its potential returns per unit of risk. Baker Boyer Bancorp is currently generating about -0.31 per unit of risk. If you would invest  14,536  in GE Aerospace on February 3, 2024 and sell it today you would earn a total of  1,728  from holding GE Aerospace or generate 11.89% return on investment over 90 days.

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

GE Aerospace  vs.  Baker Boyer Bancorp

GE Aerospace

Risk-Adjusted Performance

24 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in GE Aerospace are ranked lower than 24 (%) of all global equities and portfolios over the last 90 days. In spite of rather abnormal technical and fundamental indicators, GE Aerospace exhibited solid returns over the last few months and may actually be approaching a breakup point.

Baker Boyer Bancorp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Baker Boyer Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's fundamental drivers remain quite persistent which may send shares a bit higher in June 2024. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with GE Aerospace and Baker Boyer

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

The idea behind GE Aerospace and Baker Boyer Bancorp 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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.