Correlation Between BBX Capital and Brightsphere Investment

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

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

Diversification Opportunities for BBX Capital and Brightsphere Investment

-0.76

Correlation Coefficient

BBX Capital  Brightsphere Investment

Pay attention - limited upside

The 3 months correlation between BBX and Brightsphere is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding BBX Capital and Brightsphere Investment Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brightsphere Investment and BBX Capital 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 BBX Capital 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 BBX Capital i.e., BBX Capital and Brightsphere Investment go up and down completely randomly.

Pair Corralation between BBX Capital and Brightsphere Investment

Assuming the 90 days horizon BBX Capital is expected to under-perform the Brightsphere Investment. But the otc stock apears to be less risky and, when comparing its historical volatility, BBX Capital is 5.17 times less risky than Brightsphere Investment. The otc stock trades about -0.14 of its potential returns per unit of risk. The Brightsphere Investment Group is currently generating about 0.42 of returns per unit of risk over similar time horizon. If you would invest  2,637  in Brightsphere Investment Group on August 31, 2024 and sell it today you would earn a total of  484.00  from holding Brightsphere Investment Group or generate 18.35% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

BBX Capital  vs.  Brightsphere Investment Group

BBX Capital

Risk-Adjusted Performance

0 of 100

Very Weak

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

Brightsphere Investment

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Brightsphere Investment Group are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak forward indicators, Brightsphere Investment reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BBX Capital and Brightsphere Investment

The main advantage of trading using opposite BBX Capital and Brightsphere Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BBX Capital 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 BBX Capital 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.