Correlation Between Brightsphere Investment and Marygold Companies

Can any of the company-specific risk be diversified away by investing in both Brightsphere Investment and Marygold Companies 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 Marygold Companies 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 Marygold Companies, you can compare the effects of market volatilities on Brightsphere Investment and Marygold Companies 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 Marygold Companies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brightsphere Investment and Marygold Companies.

Diversification Opportunities for Brightsphere Investment and Marygold Companies

0.41

Correlation Coefficient

Brightsphere Investment  Marygold Companies

Very weak diversification

The 3 months correlation between Brightsphere and Marygold is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Brightsphere Investment Group and Marygold Companies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marygold Companies 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 Marygold Companies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marygold Companies has no effect on the direction of Brightsphere Investment i.e., Brightsphere Investment and Marygold Companies go up and down completely randomly.

Pair Corralation between Brightsphere Investment and Marygold Companies

Given the investment horizon of 90 days Brightsphere Investment is expected to generate 9.09 times less return on investment than Marygold Companies. But when comparing it to its historical volatility, Brightsphere Investment Group is 4.32 times less risky than Marygold Companies. It trades about 0.04 of its potential returns per unit of risk. Marygold Companies is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  113.00  in Marygold Companies on October 22, 2024 and sell it today you would earn a total of  58.00  from holding Marygold Companies or generate 51.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	90.4%
Values	Daily Returns

Brightsphere Investment Group  vs.  Marygold Companies

Brightsphere Investment

Risk-Adjusted Performance

0 of 100

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.

Marygold Companies

Risk-Adjusted Performance

5 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Marygold Companies are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather inconsistent essential indicators, Marygold Companies exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Brightsphere Investment and Marygold Companies

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

The idea behind Brightsphere Investment Group and Marygold Companies 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.