Correlation Between GE Aerospace and KIMBERLY

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

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

Diversification Opportunities for GE Aerospace and KIMBERLY

0.05

Correlation Coefficient

GE Aerospace  KIMBERLY

Significant diversification

The 3 months correlation between GE Aerospace and KIMBERLY is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding GE Aerospace and KIMBERLY CLARK P in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KIMBERLY CLARK P 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 KIMBERLY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KIMBERLY CLARK P has no effect on the direction of GE Aerospace i.e., GE Aerospace and KIMBERLY go up and down completely randomly.

Pair Corralation between GE Aerospace and KIMBERLY

Allowing for the 90-day total investment horizon GE Aerospace is expected to under-perform the KIMBERLY. In addition to that, GE Aerospace is 2.04 times more volatile than KIMBERLY CLARK P. It trades about -0.19 of its total potential returns per unit of risk. KIMBERLY CLARK P is currently generating about 0.05 per unit of volatility. If you would invest  8,029  in KIMBERLY CLARK P on September 15, 2024 and sell it today you would earn a total of  46.00  from holding KIMBERLY CLARK P or generate 0.57% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	71.43%
Values	Daily Returns

GE Aerospace  vs.  KIMBERLY CLARK P

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 latest abnormal performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

KIMBERLY CLARK P

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days KIMBERLY CLARK P has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Bond's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for KIMBERLY CLARK P investors.

Pair Trading with GE Aerospace and KIMBERLY

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

The idea behind GE Aerospace and KIMBERLY CLARK P 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.