Correlation Between GE Aerospace and ProShares Ultra

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

By analyzing existing cross correlation between GE Aerospace and ProShares Ultra SmallCap600, you can compare the effects of market volatilities on GE Aerospace and ProShares Ultra 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 ProShares Ultra. Check out your portfolio center. Please also check ongoing floating volatility patterns of GE Aerospace and ProShares Ultra.

Diversification Opportunities for GE Aerospace and ProShares Ultra

0.8

Correlation Coefficient

GE Aerospace  ProShares Ultra

Very poor diversification

The 3 months correlation between GE Aerospace and ProShares is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding GE Aerospace and ProShares Ultra SmallCap600 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares Ultra Smal 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 ProShares Ultra. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares Ultra Smal has no effect on the direction of GE Aerospace i.e., GE Aerospace and ProShares Ultra go up and down completely randomly.

Pair Corralation between GE Aerospace and ProShares Ultra

Allowing for the 90-day total investment horizon GE Aerospace is expected to generate 0.62 times more return on investment than ProShares Ultra. However, GE Aerospace is 1.62 times less risky than ProShares Ultra. It trades about 0.3 of its potential returns per unit of risk. ProShares Ultra SmallCap600 is currently generating about 0.09 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	Strong
Accuracy	100.0%
Values	Daily Returns

GE Aerospace  vs.  ProShares Ultra SmallCap600

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.

ProShares Ultra Smal

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in ProShares Ultra SmallCap600 are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat abnormal basic indicators, ProShares Ultra sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with GE Aerospace and ProShares Ultra

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

The idea behind GE Aerospace and ProShares Ultra SmallCap600 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 Anywhere module to track or share privately all of your investments from the convenience of any device.