Correlation Between GE Aerospace and Vanguard Value

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

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

Diversification Opportunities for GE Aerospace and Vanguard Value

0.56

Correlation Coefficient

GE Aerospace  Vanguard Value

Very weak diversification

The 3 months correlation between GE Aerospace and Vanguard is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding GE Aerospace and Vanguard Value Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Value Index 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 Vanguard Value. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Value Index has no effect on the direction of GE Aerospace i.e., GE Aerospace and Vanguard Value go up and down completely randomly.

Pair Corralation between GE Aerospace and Vanguard Value

Allowing for the 90-day total investment horizon GE Aerospace is expected to generate 2.16 times more return on investment than Vanguard Value. However, GE Aerospace is 2.16 times more volatile than Vanguard Value Index. It trades about 0.27 of its potential returns per unit of risk. Vanguard Value Index is currently generating about 0.14 per unit of risk. If you would invest  20,961  in GE Aerospace on May 7, 2025 and sell it today you would earn a total of  5,933  from holding GE Aerospace or generate 28.3% return on investment over 90 days.

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

GE Aerospace  vs.  Vanguard Value Index

GE Aerospace

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in GE Aerospace are ranked lower than 21 (%) 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.

Vanguard Value Index

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Value Index are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile basic indicators, Vanguard Value may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with GE Aerospace and Vanguard Value

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

The idea behind GE Aerospace and Vanguard Value Index 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.