Correlation Between Avantax and Brightsphere Investment

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

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

Diversification Opportunities for Avantax and Brightsphere Investment

0.23

Correlation Coefficient

Avantax  Brightsphere Investment

Modest diversification

The 3 months correlation between Avantax and Brightsphere is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Avantax and Brightsphere Investment Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brightsphere Investment and Avantax 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 Avantax 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 Avantax i.e., Avantax and Brightsphere Investment go up and down completely randomly.

Pair Corralation between Avantax and Brightsphere Investment

If you would invest  2,448  in Brightsphere Investment Group on September 13, 2024 and sell it today you would earn a total of  581.00  from holding Brightsphere Investment Group or generate 23.73% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	1.56%
Values	Daily Returns

Avantax  vs.  Brightsphere Investment Group

Avantax

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Avantax has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Avantax is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Brightsphere Investment

Risk-Adjusted Performance

14 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Brightsphere Investment Group are ranked lower than 14 (%) 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 Avantax and Brightsphere Investment

The main advantage of trading using opposite Avantax and Brightsphere Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Avantax 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 Avantax 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.