Correlation Between Genworth Financial and BGC Partners

Can any of the company-specific risk be diversified away by investing in both Genworth Financial and BGC Partners 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 Genworth Financial and BGC Partners into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Genworth Financial and BGC Partners

0.2

Correlation Coefficient

Genworth Financial  BGC Partners

Modest diversification

The 3 months correlation between Genworth and BGC is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Genworth Financial and BGC Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BGC Partners and Genworth Financial 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 Genworth Financial are associated (or correlated) with BGC Partners. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BGC Partners has no effect on the direction of Genworth Financial i.e., Genworth Financial and BGC Partners go up and down completely randomly.

Pair Corralation between Genworth Financial and BGC Partners

If you would invest  443.00  in BGC Partners on January 25, 2024 and sell it today you would earn a total of  0.00  from holding BGC Partners or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	4.76%
Values	Daily Returns

Genworth Financial  vs.  BGC Partners

Genworth Financial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Genworth Financial has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Genworth Financial is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

BGC Partners

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BGC Partners has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable fundamental indicators, BGC Partners is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Genworth Financial and BGC Partners

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

The idea behind Genworth Financial and BGC Partners 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.