Correlation Between GE Aerospace and Global X
Can any of the company-specific risk be diversified away by investing in both GE Aerospace and Global X 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 Global X into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GE Aerospace and Global X Funds, you can compare the effects of market volatilities on GE Aerospace and Global X 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 Global X. Check out your portfolio center. Please also check ongoing floating volatility patterns of GE Aerospace and Global X.
Diversification Opportunities for GE Aerospace and Global X
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between GE Aerospace and Global is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding GE Aerospace and Global X Funds in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X Funds 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 Global X. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global X Funds has no effect on the direction of GE Aerospace i.e., GE Aerospace and Global X go up and down completely randomly.
Pair Corralation between GE Aerospace and Global X
Allowing for the 90-day total investment horizon GE Aerospace is expected to generate 17.64 times less return on investment than Global X. But when comparing it to its historical volatility, GE Aerospace is 16.53 times less risky than Global X. It trades about 0.2 of its potential returns per unit of risk. Global X Funds is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 3,093 in Global X Funds on January 20, 2024 and sell it today you would earn a total of 5,556 from holding Global X Funds or generate 179.63% 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. Global X Funds
Performance |
| Timeline |
| GE Aerospace |
| Global X Funds |
GE Aerospace and Global X Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GE Aerospace and Global X
The main advantage of trading using opposite GE Aerospace and Global X positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GE Aerospace position performs unexpectedly, Global X 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 Global X will offset losses from the drop in Global X's long position.| GE Aerospace vs. Illinois Tool Works | GE Aerospace vs. Dover | GE Aerospace vs. Cummins | GE Aerospace vs. Eaton PLC |
| Global X vs. iPath Series B | Global X vs. Grayscale Bitcoin Trust | Global X vs. Global X Funds | Global X vs. Humana Inc |
Check out your portfolio center.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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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