Correlation Between General Electric and One Choice

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

Diversification Opportunities for General Electric and One Choice

0.87
  Correlation Coefficient

Very poor diversification

The 3 months correlation between General and AAAFX is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding General Electric and One Choice Blend in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on One Choice Blend and General Electric 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 General Electric are associated (or correlated) with One Choice. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of One Choice Blend has no effect on the direction of General Electric i.e., General Electric and One Choice go up and down completely randomly.

Pair Corralation between General Electric and One Choice

Allowing for the 90-day total investment horizon General Electric is expected to under-perform the One Choice. In addition to that, General Electric is 3.68 times more volatile than One Choice Blend. It trades about -0.05 of its total potential returns per unit of risk. One Choice Blend is currently generating about -0.07 per unit of volatility. If you would invest  1,033  in One Choice Blend on May 10, 2022 and sell it today you would lose (95.00)  from holding One Choice Blend or give up 9.2% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

General Electric  vs.  One Choice Blend

 Performance (%) 
       Timeline  
General Electric 
General Performance
2 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in General Electric are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, General Electric is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

General Price Channel

One Choice Blend 
AAAFX Performance
3 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in One Choice Blend are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, One Choice is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

AAAFX Price Channel

General Electric and One Choice Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with General Electric and One Choice

The main advantage of trading using opposite General Electric and One Choice positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if General Electric position performs unexpectedly, One Choice 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 One Choice will offset losses from the drop in One Choice's long position.
The idea behind General Electric and One Choice Blend 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.

One Choice Blend

Pair trading matchups for One Choice

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 ETF Directory module to find actively traded Exchange Traded Funds (ETF) from around the world.

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