Correlation Between BrightView Holdings and CoStar

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

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

Diversification Opportunities for BrightView Holdings and CoStar

0.64

Correlation Coefficient

BrightView Holdings  CoStar

Poor diversification

The 3 months correlation between BrightView and CoStar is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding BrightView Holdings and CoStar Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CoStar Group 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 CoStar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CoStar Group has no effect on the direction of BrightView Holdings i.e., BrightView Holdings and CoStar go up and down completely randomly.

Pair Corralation between BrightView Holdings and CoStar

Allowing for the 90-day total investment horizon BrightView Holdings is expected to generate 1.29 times more return on investment than CoStar. However, BrightView Holdings is 1.29 times more volatile than CoStar Group. It trades about -0.05 of its potential returns per unit of risk. CoStar Group is currently generating about -0.09 per unit of risk. If you would invest  1,652  in BrightView Holdings on October 15, 2024 and sell it today you would lose (151.00) from holding BrightView Holdings or give up 9.14% of portfolio value over 90 days.

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

BrightView Holdings  vs.  CoStar Group

BrightView Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BrightView Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

CoStar Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CoStar Group has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest conflicting performance, the Stock's technical and fundamental indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with BrightView Holdings and CoStar

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

The idea behind BrightView Holdings and CoStar Group 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.