Correlation Between General Electric and Icad

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Can any of the company-specific risk be diversified away by investing in both General Electric and Icad 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 General Electric and Icad into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Electric and Icad Inc, you can compare the effects of market volatilities on General Electric and Icad 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 General Electric with a short position of Icad. Check out your portfolio center. Please also check ongoing floating volatility patterns of General Electric and Icad.

Diversification Opportunities for General Electric and Icad

-0.4
  Correlation Coefficient

Very good diversification

The 3 months correlation between General and Icad is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding General Electric and Icad Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Icad Inc and General Electric 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 General Electric are associated (or correlated) with Icad. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Icad Inc has no effect on the direction of General Electric i.e., General Electric and Icad go up and down completely randomly.

Pair Corralation between General Electric and Icad

Allowing for the 90-day total investment horizon General Electric is expected to generate 0.44 times more return on investment than Icad. However, General Electric is 2.25 times less risky than Icad. It trades about -0.03 of its potential returns per unit of risk. Icad Inc is currently generating about -0.1 per unit of risk. If you would invest  10,655  in General Electric on September 7, 2022 and sell it today you would lose (2,127)  from holding General Electric or give up 19.96% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

General Electric  vs.  Icad Inc

 Performance (%) 
       Timeline  
General Electric 
General Performance
9 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in General Electric are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather inconsistent technical and fundamental indicators, General Electric exhibited solid returns over the last few months and may actually be approaching a breakup point.

General Price Channel

Icad Inc 
Icad Performance
0 of 100
Over the last 90 days Icad Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in January 2023. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Icad Price Channel

General Electric and Icad Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with General Electric and Icad

The main advantage of trading using opposite General Electric and Icad positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if General Electric position performs unexpectedly, Icad 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 Icad will offset losses from the drop in Icad's long position.
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The idea behind General Electric and Icad Inc 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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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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.

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