Correlation Between Brightsphere Investment and Tri Continental

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

Diversification Opportunities for Brightsphere Investment and Tri Continental

0.29

Correlation Coefficient

Brightsphere Investment  Tri Continental

Modest diversification

The 3 months correlation between Brightsphere and Tri is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Brightsphere Investment Group and Tri Continental Closed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tri Continental Closed 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 Tri Continental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tri Continental Closed has no effect on the direction of Brightsphere Investment i.e., Brightsphere Investment and Tri Continental go up and down completely randomly.

Pair Corralation between Brightsphere Investment and Tri Continental

Given the investment horizon of 90 days Brightsphere Investment is expected to generate 1.05 times less return on investment than Tri Continental. In addition to that, Brightsphere Investment is 2.14 times more volatile than Tri Continental Closed. It trades about 0.03 of its total potential returns per unit of risk. Tri Continental Closed is currently generating about 0.07 per unit of volatility. If you would invest  2,434  in Tri Continental Closed on October 10, 2024 and sell it today you would earn a total of  738.00  from holding Tri Continental Closed or generate 30.32% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.19%
Values	Daily Returns

Brightsphere Investment Group  vs.  Tri Continental Closed

Brightsphere Investment

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Brightsphere Investment Group are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak forward indicators, Brightsphere Investment may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Tri Continental Closed

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tri Continental Closed has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Tri Continental is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Brightsphere Investment and Tri Continental

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

The idea behind Brightsphere Investment Group and Tri Continental Closed 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.