Correlation Between BGT Public and Arrow Syndicate

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

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

Diversification Opportunities for BGT Public and Arrow Syndicate

0.28

Correlation Coefficient

BGT Public  Arrow Syndicate

Modest diversification

The 3 months correlation between BGT and Arrow is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding BGT Public and Arrow Syndicate Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arrow Syndicate Public and BGT Public 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 BGT Public are associated (or correlated) with Arrow Syndicate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arrow Syndicate Public has no effect on the direction of BGT Public i.e., BGT Public and Arrow Syndicate go up and down completely randomly.

Pair Corralation between BGT Public and Arrow Syndicate

Assuming the 90 days trading horizon BGT Public is expected to under-perform the Arrow Syndicate. In addition to that, BGT Public is 2.67 times more volatile than Arrow Syndicate Public. It trades about -0.13 of its total potential returns per unit of risk. Arrow Syndicate Public is currently generating about -0.01 per unit of volatility. If you would invest  565.00  in Arrow Syndicate Public on September 14, 2024 and sell it today you would lose (5.00) from holding Arrow Syndicate Public or give up 0.88% of portfolio value over 90 days.

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

BGT Public  vs.  Arrow Syndicate Public

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.

Arrow Syndicate Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Arrow Syndicate Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental drivers, Arrow Syndicate is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with BGT Public and Arrow Syndicate

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

The idea behind BGT Public and Arrow Syndicate 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.