Correlation Between Brightspire Capital and W P

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

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

Diversification Opportunities for Brightspire Capital and W P

0.83

Correlation Coefficient

Brightspire Capital  W P

Very poor diversification

The 3 months correlation between Brightspire and WPC is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Brightspire Capital and W P Carey in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on W P Carey and Brightspire 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 Brightspire Capital are associated (or correlated) with W P. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of W P Carey has no effect on the direction of Brightspire Capital i.e., Brightspire Capital and W P go up and down completely randomly.

Pair Corralation between Brightspire Capital and W P

Given the investment horizon of 90 days Brightspire Capital is expected to generate 6.74 times less return on investment than W P. In addition to that, Brightspire Capital is 1.07 times more volatile than W P Carey. It trades about 0.03 of its total potential returns per unit of risk. W P Carey is currently generating about 0.2 per unit of volatility. If you would invest  5,372  in W P Carey on December 29, 2024 and sell it today you would earn a total of  898.00  from holding W P Carey or generate 16.72% return on investment over 90 days.

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

Brightspire Capital  vs.  W P Carey

Brightspire Capital

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Brightspire Capital are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Brightspire Capital is not utilizing all of its potentials. The newest stock price agitation, may contribute to short-term losses for the retail investors.

W P Carey

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in W P Carey are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, W P exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Brightspire Capital and W P

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

The idea behind Brightspire Capital and W P Carey 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.