Correlation Between GE Aerospace and Methanex

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

By analyzing existing cross correlation between GE Aerospace and Methanex 565 percent, you can compare the effects of market volatilities on GE Aerospace and Methanex 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 Methanex. Check out your portfolio center. Please also check ongoing floating volatility patterns of GE Aerospace and Methanex.

Diversification Opportunities for GE Aerospace and Methanex

0.37

Correlation Coefficient

GE Aerospace  Methanex

Weak diversification

The 3 months correlation between GE Aerospace and Methanex is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding GE Aerospace and Methanex 565 percent in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Methanex 565 percent 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 Methanex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Methanex 565 percent has no effect on the direction of GE Aerospace i.e., GE Aerospace and Methanex go up and down completely randomly.

Pair Corralation between GE Aerospace and Methanex

Allowing for the 90-day total investment horizon GE Aerospace is expected to generate 0.89 times more return on investment than Methanex. However, GE Aerospace is 1.13 times less risky than Methanex. It trades about 0.15 of its potential returns per unit of risk. Methanex 565 percent is currently generating about 0.0 per unit of risk. If you would invest  5,054  in GE Aerospace on September 12, 2024 and sell it today you would earn a total of  12,073  from holding GE Aerospace or generate 238.88% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	90.71%
Values	Daily Returns

GE Aerospace  vs.  Methanex 565 percent

GE Aerospace

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in GE Aerospace are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, GE Aerospace is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Methanex 565 percent

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Methanex 565 percent has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak 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 Methanex 565 percent investors.

Pair Trading with GE Aerospace and Methanex

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

The idea behind GE Aerospace and Methanex 565 percent 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.