Correlation Between Travelers Companies and BGC Partners

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

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

Diversification Opportunities for Travelers Companies and BGC Partners

-0.24

Correlation Coefficient

Travelers Companies  BGC Partners

Very good diversification

The 3 months correlation between Travelers and BGC is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding The Travelers Companies and BGC Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BGC Partners and Travelers Companies 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 The Travelers Companies 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 Travelers Companies i.e., Travelers Companies and BGC Partners go up and down completely randomly.

Pair Corralation between Travelers Companies and BGC Partners

If you would invest  21,910  in The Travelers Companies on February 19, 2024 and sell it today you would earn a total of  61.00  from holding The Travelers Companies or generate 0.28% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	1.56%
Values	Daily Returns

The Travelers Companies  vs.  BGC Partners

The Travelers Companies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days The Travelers Companies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Travelers Companies is not utilizing all of its potentials. The current 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 Travelers Companies and BGC Partners

The main advantage of trading using opposite Travelers Companies and BGC Partners positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Travelers Companies 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 The Travelers Companies 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.