Correlation Between GE Aerospace and WisdomTree Japan
Can any of the company-specific risk be diversified away by investing in both GE Aerospace and WisdomTree Japan 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 WisdomTree Japan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GE Aerospace and WisdomTree Japan Hedged, you can compare the effects of market volatilities on GE Aerospace and WisdomTree Japan 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 WisdomTree Japan. Check out your portfolio center. Please also check ongoing floating volatility patterns of GE Aerospace and WisdomTree Japan.
Diversification Opportunities for GE Aerospace and WisdomTree Japan
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between GE Aerospace and WisdomTree is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding GE Aerospace and WisdomTree Japan Hedged in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WisdomTree Japan Hedged 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 WisdomTree Japan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WisdomTree Japan Hedged has no effect on the direction of GE Aerospace i.e., GE Aerospace and WisdomTree Japan go up and down completely randomly.
Pair Corralation between GE Aerospace and WisdomTree Japan
Allowing for the 90-day total investment horizon GE Aerospace is expected to generate 1.08 times more return on investment than WisdomTree Japan. However, GE Aerospace is 1.08 times more volatile than WisdomTree Japan Hedged. It trades about 0.55 of its potential returns per unit of risk. WisdomTree Japan Hedged is currently generating about -0.01 per unit of risk. If you would invest 21,895 in GE Aerospace on March 13, 2025 and sell it today you would earn a total of 3,246 from holding GE Aerospace or generate 14.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
GE Aerospace vs. WisdomTree Japan Hedged
Performance |
| Timeline |
| GE Aerospace |
| WisdomTree Japan Hedged |
GE Aerospace and WisdomTree Japan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GE Aerospace and WisdomTree Japan
The main advantage of trading using opposite GE Aerospace and WisdomTree Japan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GE Aerospace position performs unexpectedly, WisdomTree Japan 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 WisdomTree Japan will offset losses from the drop in WisdomTree Japan's long position.| GE Aerospace vs. Thrivent High Yield | GE Aerospace vs. Morningstar Unconstrained Allocation | GE Aerospace vs. Via Renewables | GE Aerospace vs. T Rowe Price |
| WisdomTree Japan vs. WisdomTree Europe Hedged | WisdomTree Japan vs. WisdomTree Japan SmallCap | WisdomTree Japan vs. WisdomTree Europe SmallCap | WisdomTree Japan vs. iShares MSCI Japan |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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