Correlation Between Generation Income and Brightspire Capital

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

By analyzing existing cross correlation between Generation Income Properties and Brightspire Capital, you can compare the effects of market volatilities on Generation Income and Brightspire Capital 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 Generation Income with a short position of Brightspire Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Generation Income and Brightspire Capital.

Diversification Opportunities for Generation Income and Brightspire Capital

0.23

Correlation Coefficient

Generation Income  Brightspire Capital

Modest diversification

The 3 months correlation between Generation and Brightspire is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Generation Income Properties and Brightspire Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brightspire Capital and Generation Income 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 Generation Income Properties are associated (or correlated) with Brightspire Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brightspire Capital has no effect on the direction of Generation Income i.e., Generation Income and Brightspire Capital go up and down completely randomly.

Pair Corralation between Generation Income and Brightspire Capital

Assuming the 90 days horizon Generation Income Properties is expected to generate 16.69 times more return on investment than Brightspire Capital. However, Generation Income is 16.69 times more volatile than Brightspire Capital. It trades about 0.24 of its potential returns per unit of risk. Brightspire Capital is currently generating about -0.15 per unit of risk. If you would invest  18.00  in Generation Income Properties on December 24, 2024 and sell it today you would earn a total of  16.01  from holding Generation Income Properties or generate 88.94% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	90.91%
Values	Daily Returns

Generation Income Properties  vs.  Brightspire Capital

Generation Income

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Generation Income Properties are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Generation Income showed solid returns over the last few months and may actually be approaching a breakup point.

Brightspire Capital

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Brightspire Capital are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Brightspire Capital is not utilizing all of its potentials. The newest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Generation Income and Brightspire Capital

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

The idea behind Generation Income Properties and Brightspire Capital 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.