Correlation Between GE Aerospace and Evergold Corp

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

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

Diversification Opportunities for GE Aerospace and Evergold Corp

-0.09

Correlation Coefficient

GE Aerospace  Evergold Corp

Good diversification

The 3 months correlation between GE Aerospace and Evergold is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding GE Aerospace and Evergold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evergold Corp 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 Evergold Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Evergold Corp has no effect on the direction of GE Aerospace i.e., GE Aerospace and Evergold Corp go up and down completely randomly.

Pair Corralation between GE Aerospace and Evergold Corp

Allowing for the 90-day total investment horizon GE Aerospace is expected to generate 8.45 times less return on investment than Evergold Corp. But when comparing it to its historical volatility, GE Aerospace is 23.93 times less risky than Evergold Corp. It trades about 0.3 of its potential returns per unit of risk. Evergold Corp is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  1.80  in Evergold Corp on May 8, 2025 and sell it today you would lose (0.20) from holding Evergold Corp or give up 11.11% of portfolio value over 90 days.

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

GE Aerospace  vs.  Evergold Corp

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 uncertain technical and fundamental indicators, GE Aerospace exhibited solid returns over the last few months and may actually be approaching a breakup point.

Evergold Corp

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Evergold Corp are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Evergold Corp reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with GE Aerospace and Evergold Corp

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

The idea behind GE Aerospace and Evergold Corp 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.