Correlation Between Brightsphere Investment and Blue Line

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

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

Diversification Opportunities for Brightsphere Investment and Blue Line

-0.55

Correlation Coefficient

Brightsphere Investment  Blue Line

Excellent diversification

The 3 months correlation between Brightsphere and Blue is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Brightsphere Investment Group and Blue Line Protection in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blue Line Protection and Brightsphere Investment 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 Brightsphere Investment Group are associated (or correlated) with Blue Line. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blue Line Protection has no effect on the direction of Brightsphere Investment i.e., Brightsphere Investment and Blue Line go up and down completely randomly.

Pair Corralation between Brightsphere Investment and Blue Line

Given the investment horizon of 90 days Brightsphere Investment is expected to generate 33.4 times less return on investment than Blue Line. But when comparing it to its historical volatility, Brightsphere Investment Group is 11.44 times less risky than Blue Line. It trades about 0.02 of its potential returns per unit of risk. Blue Line Protection is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  15.00  in Blue Line Protection on October 12, 2024 and sell it today you would lose (8.99) from holding Blue Line Protection or give up 59.93% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.79%
Values	Daily Returns

Brightsphere Investment Group  vs.  Blue Line Protection

Brightsphere Investment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Brightsphere Investment Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable forward indicators, Brightsphere Investment is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Blue Line Protection

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Blue Line Protection has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Brightsphere Investment and Blue Line

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

The idea behind Brightsphere Investment Group and Blue Line Protection 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.