Correlation Between Apple and BGC Partners

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Can any of the company-specific risk be diversified away by investing in both Apple 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 Apple and BGC Partners into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Apple Inc and BGC Partners, you can compare the effects of market volatilities on Apple 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 Apple with a short position of BGC Partners. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apple and BGC Partners.

Diversification Opportunities for Apple and BGC Partners

0.45
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Apple and BGC Partners is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and BGC Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BGC Partners and Apple 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 Apple Inc 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 Apple i.e., Apple and BGC Partners go up and down completely randomly.

Pair Corralation between Apple and BGC Partners

Given the investment horizon of 90 days Apple Inc is expected to generate 0.75 times more return on investment than BGC Partners. However, Apple Inc is 1.34 times less risky than BGC Partners. It trades about 0.03 of its potential returns per unit of risk. BGC Partners is currently generating about 0.02 per unit of risk. If you would invest  12,636  in Apple Inc on September 6, 2022 and sell it today you would earn a total of  2,043  from holding Apple Inc or generate 16.17% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy99.8%
ValuesDaily Returns

Apple Inc  vs.  BGC Partners

 Performance (%) 
       Timeline  
Apple Inc 
Apple Performance
0 of 100
Over the last 90 days Apple Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively steady basic indicators, Apple is not utilizing all of its potentials. The current stock price chaos, may contribute to medium-term losses for the stakeholders.

Apple Price Channel

BGC Partners 
BGC Partners Performance
5 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in BGC Partners are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady fundamental indicators, BGC Partners displayed solid returns over the last few months and may actually be approaching a breakup point.

BGC Partners Price Channel

Apple and BGC Partners Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Apple and BGC Partners

The main advantage of trading using opposite Apple and BGC Partners positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple 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.
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The idea behind Apple Inc 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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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 Price Transformation module to use Price Transformation models to analyze depth of different equity instruments across global markets.

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