Correlation Between Sensient Technologies and BGC
Can any of the company-specific risk be diversified away by investing in both Sensient Technologies and BGC 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 Sensient Technologies and BGC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sensient Technologies and BGC Group, you can compare the effects of market volatilities on Sensient Technologies and BGC 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 Sensient Technologies with a short position of BGC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sensient Technologies and BGC.
Diversification Opportunities for Sensient Technologies and BGC
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Sensient and BGC is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Sensient Technologies and BGC Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BGC Group and Sensient Technologies 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 Sensient Technologies are associated (or correlated) with BGC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BGC Group has no effect on the direction of Sensient Technologies i.e., Sensient Technologies and BGC go up and down completely randomly.
Pair Corralation between Sensient Technologies and BGC
Considering the 90-day investment horizon Sensient Technologies is expected to generate 7.31 times less return on investment than BGC. But when comparing it to its historical volatility, Sensient Technologies is 1.43 times less risky than BGC. It trades about 0.02 of its potential returns per unit of risk. BGC Group is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 462.00 in BGC Group on September 2, 2024 and sell it today you would earn a total of 512.00 from holding BGC Group or generate 110.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sensient Technologies vs. BGC Group
Performance |
| Timeline |
| Sensient Technologies |
| BGC Group |
Sensient Technologies and BGC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sensient Technologies and BGC
The main advantage of trading using opposite Sensient Technologies and BGC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sensient Technologies position performs unexpectedly, BGC 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 will offset losses from the drop in BGC's long position.| Sensient Technologies vs. Innospec | Sensient Technologies vs. Minerals Technologies | Sensient Technologies vs. Oil Dri | Sensient Technologies vs. H B Fuller |
| BGC vs. BTB Real Estate | BGC vs. Old Republic International | BGC vs. Bank of America | BGC vs. FactSet Research Systems |
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 the Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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