Correlation Between GE Aerospace and Clarivate Plc

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

By analyzing existing cross correlation between GE Aerospace and Clarivate Plc, you can compare the effects of market volatilities on GE Aerospace and Clarivate Plc 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 Clarivate Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of GE Aerospace and Clarivate Plc.

Diversification Opportunities for GE Aerospace and Clarivate Plc

-0.82

Correlation Coefficient

GE Aerospace  Clarivate Plc

Pay attention - limited upside

The 3 months correlation between GE Aerospace and Clarivate is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding GE Aerospace and Clarivate Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clarivate Plc 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 Clarivate Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clarivate Plc has no effect on the direction of GE Aerospace i.e., GE Aerospace and Clarivate Plc go up and down completely randomly.

Pair Corralation between GE Aerospace and Clarivate Plc

Allowing for the 90-day total investment horizon GE Aerospace is expected to generate 1.56 times more return on investment than Clarivate Plc. However, GE Aerospace is 1.56 times more volatile than Clarivate Plc. It trades about 0.25 of its potential returns per unit of risk. Clarivate Plc is currently generating about -0.09 per unit of risk. If you would invest  13,984  in GE Aerospace on January 28, 2024 and sell it today you would earn a total of  2,251  from holding GE Aerospace or generate 16.1% 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.  Clarivate Plc

GE Aerospace

Risk-Adjusted Performance

27 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in GE Aerospace are ranked lower than 27 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, GE Aerospace exhibited solid returns over the last few months and may actually be approaching a breakup point.

Clarivate Plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Clarivate Plc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Preferred Stock's basic indicators remain somewhat strong which may send shares a bit higher in May 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with GE Aerospace and Clarivate Plc

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

The idea behind GE Aerospace and Clarivate Plc 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.