Correlation Between GE Aerospace and Cogeco
Can any of the company-specific risk be diversified away by investing in both GE Aerospace and Cogeco 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 Cogeco into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GE Aerospace and Cogeco Inc, you can compare the effects of market volatilities on GE Aerospace and Cogeco 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 Cogeco. Check out your portfolio center. Please also check ongoing floating volatility patterns of GE Aerospace and Cogeco.
Diversification Opportunities for GE Aerospace and Cogeco
-0.81 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between GE Aerospace and Cogeco is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding GE Aerospace and Cogeco Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cogeco Inc 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 Cogeco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cogeco Inc has no effect on the direction of GE Aerospace i.e., GE Aerospace and Cogeco go up and down completely randomly.
Pair Corralation between GE Aerospace and Cogeco
Allowing for the 90-day total investment horizon GE Aerospace is expected to generate 1.18 times more return on investment than Cogeco. However, GE Aerospace is 1.18 times more volatile than Cogeco Inc. It trades about 0.15 of its potential returns per unit of risk. Cogeco Inc is currently generating about -0.24 per unit of risk. If you would invest 15,624 in GE Aerospace on February 7, 2024 and sell it today you would earn a total of 1,173 from holding GE Aerospace or generate 7.51% 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. Cogeco Inc
Performance |
Timeline |
GE Aerospace |
Cogeco Inc |
GE Aerospace and Cogeco Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with GE Aerospace and Cogeco
The main advantage of trading using opposite GE Aerospace and Cogeco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GE Aerospace position performs unexpectedly, Cogeco 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 Cogeco will offset losses from the drop in Cogeco's long position.GE Aerospace vs. Illinois Tool Works | GE Aerospace vs. Dover | GE Aerospace vs. Cummins | GE Aerospace vs. Eaton PLC |
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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 the Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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