Correlation Between GE Aerospace and SPDR SP

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

By analyzing existing cross correlation between GE Aerospace and SPDR SP 500, you can compare the effects of market volatilities on GE Aerospace and SPDR SP 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 SPDR SP. Check out your portfolio center. Please also check ongoing floating volatility patterns of GE Aerospace and SPDR SP.

Diversification Opportunities for GE Aerospace and SPDR SP

0.92

Correlation Coefficient

GE Aerospace  SPDR SP

Almost no diversification

The 3 months correlation between GE Aerospace and SPDR is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding GE Aerospace and SPDR SP 500 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR SP 500 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 SPDR SP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR SP 500 has no effect on the direction of GE Aerospace i.e., GE Aerospace and SPDR SP go up and down completely randomly.

Pair Corralation between GE Aerospace and SPDR SP

Allowing for the 90-day total investment horizon GE Aerospace is expected to generate 1.95 times more return on investment than SPDR SP. However, GE Aerospace is 1.95 times more volatile than SPDR SP 500. It trades about 0.3 of its potential returns per unit of risk. SPDR SP 500 is currently generating about 0.25 per unit of risk. If you would invest  20,830  in GE Aerospace on May 6, 2025 and sell it today you would earn a total of  6,108  from holding GE Aerospace or generate 29.32% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

GE Aerospace  vs.  SPDR SP 500

GE Aerospace

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in GE Aerospace are ranked lower than 23 (%) 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.

SPDR SP 500

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in SPDR SP 500 are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady forward indicators, SPDR SP may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with GE Aerospace and SPDR SP

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

The idea behind GE Aerospace and SPDR SP 500 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 Commodity Directory module to find actively traded commodities issued by global exchanges.