Correlation Between Bright Horizons and Interactive Strength

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

By analyzing existing cross correlation between Bright Horizons Family and Interactive Strength Common, you can compare the effects of market volatilities on Bright Horizons and Interactive Strength 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 Bright Horizons with a short position of Interactive Strength. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bright Horizons and Interactive Strength.

Diversification Opportunities for Bright Horizons and Interactive Strength

-0.75

Correlation Coefficient

Bright Horizons  Interactive Strength

Pay attention - limited upside

The 3 months correlation between Bright and Interactive is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Bright Horizons Family and Interactive Strength Common in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Interactive Strength and Bright Horizons 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 Bright Horizons Family are associated (or correlated) with Interactive Strength. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Interactive Strength has no effect on the direction of Bright Horizons i.e., Bright Horizons and Interactive Strength go up and down completely randomly.

Pair Corralation between Bright Horizons and Interactive Strength

Given the investment horizon of 90 days Bright Horizons Family is expected to generate 0.16 times more return on investment than Interactive Strength. However, Bright Horizons Family is 6.42 times less risky than Interactive Strength. It trades about 0.12 of its potential returns per unit of risk. Interactive Strength Common is currently generating about -0.06 per unit of risk. If you would invest  11,063  in Bright Horizons Family on December 30, 2024 and sell it today you would earn a total of  1,597  from holding Bright Horizons Family or generate 14.44% return on investment over 90 days.

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

Bright Horizons Family  vs.  Interactive Strength Common

Bright Horizons Family

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Bright Horizons Family are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Bright Horizons displayed solid returns over the last few months and may actually be approaching a breakup point.

Interactive Strength

Risk-Adjusted Performance

Very Weak

Over the last 90 days Interactive Strength Common has generated negative risk-adjusted returns adding no value to investors with long positions. Even with fragile performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Bright Horizons and Interactive Strength

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

The idea behind Bright Horizons Family and Interactive Strength Common 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.

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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.