Correlation Between BrightView Holdings and Astec Industries

Can any of the company-specific risk be diversified away by investing in both BrightView Holdings and Astec Industries 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 BrightView Holdings and Astec Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between BrightView Holdings and Astec Industries, you can compare the effects of market volatilities on BrightView Holdings and Astec Industries 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 BrightView Holdings with a short position of Astec Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of BrightView Holdings and Astec Industries.

Diversification Opportunities for BrightView Holdings and Astec Industries

0.67

Correlation Coefficient

BrightView Holdings  Astec Industries

Poor diversification

The 3 months correlation between BrightView and Astec is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding BrightView Holdings and Astec Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Astec Industries and BrightView Holdings 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 BrightView Holdings are associated (or correlated) with Astec Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Astec Industries has no effect on the direction of BrightView Holdings i.e., BrightView Holdings and Astec Industries go up and down completely randomly.

Pair Corralation between BrightView Holdings and Astec Industries

Allowing for the 90-day total investment horizon BrightView Holdings is expected to generate 1.7 times less return on investment than Astec Industries. In addition to that, BrightView Holdings is 1.06 times more volatile than Astec Industries. It trades about 0.08 of its total potential returns per unit of risk. Astec Industries is currently generating about 0.14 per unit of volatility. If you would invest  3,173  in Astec Industries on September 3, 2024 and sell it today you would earn a total of  732.00  from holding Astec Industries or generate 23.07% return on investment over 90 days.

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

BrightView Holdings  vs.  Astec Industries

BrightView Holdings

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in BrightView Holdings are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, BrightView Holdings showed solid returns over the last few months and may actually be approaching a breakup point.

Astec Industries

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Astec Industries are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Astec Industries exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BrightView Holdings and Astec Industries

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

The idea behind BrightView Holdings and Astec Industries 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.