Correlation Between GE Aerospace and Tenet Fintech

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

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

Diversification Opportunities for GE Aerospace and Tenet Fintech

-0.8

Correlation Coefficient

GE Aerospace  Tenet Fintech

Pay attention - limited upside

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

Pair Corralation between GE Aerospace and Tenet Fintech

Allowing for the 90-day total investment horizon GE Aerospace is expected to generate 0.21 times more return on investment than Tenet Fintech. However, GE Aerospace is 4.81 times less risky than Tenet Fintech. It trades about 0.15 of its potential returns per unit of risk. Tenet Fintech Group is currently generating about -0.04 per unit of risk. If you would invest  4,848  in GE Aerospace on January 25, 2024 and sell it today you would earn a total of  11,414  from holding GE Aerospace or generate 235.44% return on investment over 90 days.

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

GE Aerospace  vs.  Tenet Fintech Group

GE Aerospace

Risk-Adjusted Performance

28 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in GE Aerospace are ranked lower than 28 (%) of all global equities and portfolios over the last 90 days. In spite of rather inconsistent technical and fundamental indicators, GE Aerospace exhibited solid returns over the last few months and may actually be approaching a breakup point.

Tenet Fintech Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tenet Fintech Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's technical and fundamental indicators remain nearly stable which may send shares a bit higher in May 2024. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with GE Aerospace and Tenet Fintech

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

The idea behind GE Aerospace and Tenet Fintech Group 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.