Correlation Between Dover Corp and General Electric

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Can any of the company-specific risk be diversified away by investing in both Dover Corp and General Electric 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 Dover Corp and General Electric into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dover Corp and General Electric, you can compare the effects of market volatilities on Dover Corp and General Electric 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 Dover Corp with a short position of General Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dover Corp and General Electric.

Diversification Opportunities for Dover Corp and General Electric

0.95
  Correlation Coefficient

Almost no diversification

The 1 month correlation between Dover and General is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Dover Corp and General Electric in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on General Electric and Dover Corp 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 Dover Corp are associated (or correlated) with General Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of General Electric has no effect on the direction of Dover Corp i.e., Dover Corp and General Electric go up and down completely randomly.

Pair Corralation between Dover Corp and General Electric

Considering the 90-day investment horizon Dover Corp is expected to generate 0.72 times more return on investment than General Electric. However, Dover Corp is 1.39 times less risky than General Electric. It trades about 0.01 of its potential returns per unit of risk. General Electric is currently generating about -0.03 per unit of risk. If you would invest  11,968  in Dover Corp on July 8, 2022 and sell it today you would earn a total of  440.00  from holding Dover Corp or generate 3.68% return on investment over 90 days.
Time Period1 Month [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy100.0%
ValuesDaily Returns

Dover Corp  vs.  General Electric

 Performance (%) 
       Timeline  
Dover Corp 
Dover Performance
0 of 100
Over the last 90 days Dover Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest conflicting performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Dover Price Channel

General Electric 
General Performance
0 of 100
Over the last 90 days General Electric has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in November 2022. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

General Price Channel

Dover Corp and General Electric Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Dover Corp and General Electric

The main advantage of trading using opposite Dover Corp and General Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dover Corp position performs unexpectedly, General Electric 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 General Electric will offset losses from the drop in General Electric's long position.
Dover Corp vs. Amazon Inc
The idea behind Dover Corp and General Electric 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.
General Electric vs. Amazon Inc
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.

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