Correlation Between Abrdn Emerging and Brightsphere Investment

Can any of the company-specific risk be diversified away by investing in both Abrdn Emerging and Brightsphere Investment 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 Abrdn Emerging and Brightsphere Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Abrdn Emerging Markets and Brightsphere Investment Group, you can compare the effects of market volatilities on Abrdn Emerging and Brightsphere Investment 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 Abrdn Emerging with a short position of Brightsphere Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Abrdn Emerging and Brightsphere Investment.

Diversification Opportunities for Abrdn Emerging and Brightsphere Investment

-0.25

Correlation Coefficient

Abrdn Emerging  Brightsphere Investment

Very good diversification

The 3 months correlation between Abrdn and Brightsphere is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Abrdn Emerging Markets and Brightsphere Investment Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brightsphere Investment and Abrdn Emerging 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 Abrdn Emerging Markets are associated (or correlated) with Brightsphere Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brightsphere Investment has no effect on the direction of Abrdn Emerging i.e., Abrdn Emerging and Brightsphere Investment go up and down completely randomly.

Pair Corralation between Abrdn Emerging and Brightsphere Investment

Considering the 90-day investment horizon Abrdn Emerging is expected to generate 13.64 times less return on investment than Brightsphere Investment. But when comparing it to its historical volatility, Abrdn Emerging Markets is 1.54 times less risky than Brightsphere Investment. It trades about 0.03 of its potential returns per unit of risk. Brightsphere Investment Group is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest  2,365  in Brightsphere Investment Group on September 4, 2024 and sell it today you would earn a total of  725.00  from holding Brightsphere Investment Group or generate 30.66% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Abrdn Emerging Markets  vs.  Brightsphere Investment Group

Abrdn Emerging Markets

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Abrdn Emerging Markets are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical and fundamental indicators, Abrdn Emerging is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Brightsphere Investment

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Brightsphere Investment Group are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite nearly abnormal forward indicators, Brightsphere Investment reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Abrdn Emerging and Brightsphere Investment

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

The idea behind Abrdn Emerging Markets and Brightsphere Investment Group 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.