Correlation Between Carbon Streaming and Brightsphere Investment

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

By analyzing existing cross correlation between Carbon Streaming Corp and Brightsphere Investment Group, you can compare the effects of market volatilities on Carbon Streaming and Brightsphere Investment 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 Carbon Streaming with a short position of Brightsphere Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Carbon Streaming and Brightsphere Investment.

Diversification Opportunities for Carbon Streaming and Brightsphere Investment

-0.24

Correlation Coefficient

Carbon Streaming  Brightsphere Investment

Very good diversification

The 3 months correlation between Carbon and Brightsphere is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Carbon Streaming Corp and Brightsphere Investment Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brightsphere Investment and Carbon Streaming 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 Carbon Streaming Corp are associated (or correlated) with Brightsphere Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brightsphere Investment has no effect on the direction of Carbon Streaming i.e., Carbon Streaming and Brightsphere Investment go up and down completely randomly.

Pair Corralation between Carbon Streaming and Brightsphere Investment

Assuming the 90 days horizon Carbon Streaming Corp is expected to under-perform the Brightsphere Investment. In addition to that, Carbon Streaming is 2.67 times more volatile than Brightsphere Investment Group. It trades about -0.05 of its total potential returns per unit of risk. Brightsphere Investment Group is currently generating about 0.04 per unit of volatility. If you would invest  2,478  in Brightsphere Investment Group on October 22, 2024 and sell it today you would earn a total of  156.00  from holding Brightsphere Investment Group or generate 6.3% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	90.4%
Values	Daily Returns

Carbon Streaming Corp  vs.  Brightsphere Investment Group

Carbon Streaming Corp

Risk-Adjusted Performance

4 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Carbon Streaming Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Carbon Streaming reported solid returns over the last few months and may actually be approaching a breakup point.

Brightsphere Investment

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Brightsphere Investment Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable forward indicators, Brightsphere Investment is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Carbon Streaming and Brightsphere Investment

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

The idea behind Carbon Streaming Corp and Brightsphere Investment 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.