Correlation Between G Capital and BGT Public

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

By analyzing existing cross correlation between G Capital Public and BGT Public, you can compare the effects of market volatilities on G Capital and BGT Public 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 G Capital with a short position of BGT Public. Check out your portfolio center. Please also check ongoing floating volatility patterns of G Capital and BGT Public.

Diversification Opportunities for G Capital and BGT Public

0.85

Correlation Coefficient

G Capital  BGT Public

Very poor diversification

The 3 months correlation between GCAP and BGT is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding G Capital Public and BGT Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BGT Public and G Capital 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 G Capital Public are associated (or correlated) with BGT Public. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BGT Public has no effect on the direction of G Capital i.e., G Capital and BGT Public go up and down completely randomly.

Pair Corralation between G Capital and BGT Public

Assuming the 90 days trading horizon G Capital Public is expected to under-perform the BGT Public. In addition to that, G Capital is 1.84 times more volatile than BGT Public. It trades about -0.28 of its total potential returns per unit of risk. BGT Public is currently generating about -0.15 per unit of volatility. If you would invest  64.00  in BGT Public on September 17, 2024 and sell it today you would lose (12.00) from holding BGT Public or give up 18.75% of portfolio value over 90 days.

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

G Capital Public  vs.  BGT Public

G Capital Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days G Capital Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's forward-looking signals remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

BGT Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BGT Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with G Capital and BGT Public

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

The idea behind G Capital Public and BGT Public 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..