Correlation Between Brewbilt Manufacturing and GE Aerospace

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

By analyzing existing cross correlation between Brewbilt Manufacturing and GE Aerospace, you can compare the effects of market volatilities on Brewbilt Manufacturing and GE Aerospace 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 Brewbilt Manufacturing with a short position of GE Aerospace. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brewbilt Manufacturing and GE Aerospace.

Diversification Opportunities for Brewbilt Manufacturing and GE Aerospace

-0.64

Correlation Coefficient

Brewbilt Manufacturing  GE Aerospace

Excellent diversification

The 3 months correlation between Brewbilt and GE Aerospace is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Brewbilt Manufacturing and GE Aerospace in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GE Aerospace and Brewbilt Manufacturing 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 Brewbilt Manufacturing are associated (or correlated) with GE Aerospace. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GE Aerospace has no effect on the direction of Brewbilt Manufacturing i.e., Brewbilt Manufacturing and GE Aerospace go up and down completely randomly.

Pair Corralation between Brewbilt Manufacturing and GE Aerospace

Given the investment horizon of 90 days Brewbilt Manufacturing is expected to generate 38.98 times more return on investment than GE Aerospace. However, Brewbilt Manufacturing is 38.98 times more volatile than GE Aerospace. It trades about 0.09 of its potential returns per unit of risk. GE Aerospace is currently generating about 0.15 per unit of risk. If you would invest  0.01  in Brewbilt Manufacturing on September 2, 2024 and sell it today you would lose (0.01) from holding Brewbilt Manufacturing or give up 100.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	89.52%
Values	Daily Returns

Brewbilt Manufacturing  vs.  GE Aerospace

Brewbilt Manufacturing

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Brewbilt Manufacturing has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Brewbilt Manufacturing is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

GE Aerospace

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in GE Aerospace are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather abnormal technical and fundamental indicators, GE Aerospace may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Brewbilt Manufacturing and GE Aerospace

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

The idea behind Brewbilt Manufacturing and GE Aerospace 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.