Correlation Between GE Aerospace and Victory Integrity

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

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

Diversification Opportunities for GE Aerospace and Victory Integrity

-0.01

Correlation Coefficient

GE Aerospace  Victory Integrity

Good diversification

The 3 months correlation between GE Aerospace and Victory is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding GE Aerospace and Victory Integrity Smallmid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Victory Integrity 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 Victory Integrity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Victory Integrity has no effect on the direction of GE Aerospace i.e., GE Aerospace and Victory Integrity go up and down completely randomly.

Pair Corralation between GE Aerospace and Victory Integrity

Allowing for the 90-day total investment horizon GE Aerospace is expected to under-perform the Victory Integrity. In addition to that, GE Aerospace is 1.81 times more volatile than Victory Integrity Smallmid Cap. It trades about -0.04 of its total potential returns per unit of risk. Victory Integrity Smallmid Cap is currently generating about 0.13 per unit of volatility. If you would invest  2,312  in Victory Integrity Smallmid Cap on September 13, 2024 and sell it today you would earn a total of  193.00  from holding Victory Integrity Smallmid Cap or generate 8.35% return on investment over 90 days.

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

GE Aerospace  vs.  Victory Integrity Smallmid Cap

GE Aerospace

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GE Aerospace has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, GE Aerospace is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Victory Integrity

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Victory Integrity Smallmid Cap are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Victory Integrity may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with GE Aerospace and Victory Integrity

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

The idea behind GE Aerospace and Victory Integrity Smallmid Cap 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.

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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.