Correlation Between GE Aerospace and Jpmorgan Smartretirement

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

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

Diversification Opportunities for GE Aerospace and Jpmorgan Smartretirement

0.17

Correlation Coefficient

GE Aerospace  Jpmorgan Smartretirement

Average diversification

The 3 months correlation between GE Aerospace and Jpmorgan is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding GE Aerospace and Jpmorgan Smartretirement Blend in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jpmorgan Smartretirement 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 Jpmorgan Smartretirement. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jpmorgan Smartretirement has no effect on the direction of GE Aerospace i.e., GE Aerospace and Jpmorgan Smartretirement go up and down completely randomly.

Pair Corralation between GE Aerospace and Jpmorgan Smartretirement

Allowing for the 90-day total investment horizon GE Aerospace is expected to generate 4.17 times more return on investment than Jpmorgan Smartretirement. However, GE Aerospace is 4.17 times more volatile than Jpmorgan Smartretirement Blend. It trades about 0.19 of its potential returns per unit of risk. Jpmorgan Smartretirement Blend is currently generating about 0.02 per unit of risk. If you would invest  13,974  in GE Aerospace on February 27, 2024 and sell it today you would earn a total of  2,759  from holding GE Aerospace or generate 19.74% return on investment over 90 days.

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

GE Aerospace  vs.  Jpmorgan Smartretirement Blend

GE Aerospace

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in GE Aerospace are ranked lower than 18 (%) 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.

Jpmorgan Smartretirement

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Jpmorgan Smartretirement Blend are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Jpmorgan Smartretirement is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with GE Aerospace and Jpmorgan Smartretirement

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

The idea behind GE Aerospace and Jpmorgan Smartretirement Blend 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..