Correlation Between Brightsphere Investment and NISOURCE

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

Diversification Opportunities for Brightsphere Investment and NISOURCE

0.81

Correlation Coefficient

Brightsphere Investment  NISOURCE

Very poor diversification

The 3 months correlation between Brightsphere and NISOURCE is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Brightsphere Investment Group and NISOURCE FIN P in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NISOURCE FIN P 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 NISOURCE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NISOURCE FIN P has no effect on the direction of Brightsphere Investment i.e., Brightsphere Investment and NISOURCE go up and down completely randomly.

Pair Corralation between Brightsphere Investment and NISOURCE

Given the investment horizon of 90 days Brightsphere Investment Group is expected to generate 1.4 times more return on investment than NISOURCE. However, Brightsphere Investment is 1.4 times more volatile than NISOURCE FIN P. It trades about 0.07 of its potential returns per unit of risk. NISOURCE FIN P is currently generating about -0.24 per unit of risk. If you would invest  2,452  in Brightsphere Investment Group on October 10, 2024 and sell it today you would earn a total of  182.00  from holding Brightsphere Investment Group or generate 7.42% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	63.79%
Values	Daily Returns

Brightsphere Investment Group  vs.  NISOURCE FIN P

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.

NISOURCE FIN P

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NISOURCE FIN P has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Bond's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for NISOURCE FIN P investors.

Pair Trading with Brightsphere Investment and NISOURCE

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

The idea behind Brightsphere Investment Group and NISOURCE FIN P 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.