Correlation Between GE Vernova and Black Hills

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

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

Diversification Opportunities for GE Vernova and Black Hills

0.57

Correlation Coefficient

GE Vernova  Black Hills

Very weak diversification

The 3 months correlation between GEV and Black is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding GE Vernova LLC and Black Hills in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Black Hills and GE Vernova 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 Vernova LLC are associated (or correlated) with Black Hills. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Black Hills has no effect on the direction of GE Vernova i.e., GE Vernova and Black Hills go up and down completely randomly.

Pair Corralation between GE Vernova and Black Hills

Considering the 90-day investment horizon GE Vernova LLC is expected to generate 2.97 times more return on investment than Black Hills. However, GE Vernova is 2.97 times more volatile than Black Hills. It trades about 0.02 of its potential returns per unit of risk. Black Hills is currently generating about -0.09 per unit of risk. If you would invest  32,976  in GE Vernova LLC on September 16, 2024 and sell it today you would earn a total of  225.00  from holding GE Vernova LLC or generate 0.68% return on investment over 90 days.

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

GE Vernova LLC  vs.  Black Hills

GE Vernova LLC

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in GE Vernova LLC are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain technical and fundamental indicators, GE Vernova showed solid returns over the last few months and may actually be approaching a breakup point.

Black Hills

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Black Hills are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong forward-looking signals, Black Hills is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with GE Vernova and Black Hills

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

The idea behind GE Vernova LLC and Black Hills 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.