Correlation Between Presidio Property and Brightspire Capital

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

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

Diversification Opportunities for Presidio Property and Brightspire Capital

-0.23

Correlation Coefficient

Presidio Property  Brightspire Capital

Very good diversification

The 3 months correlation between Presidio and Brightspire is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Presidio Property Trust and Brightspire Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brightspire Capital and Presidio Property 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 Presidio Property Trust 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 Presidio Property i.e., Presidio Property and Brightspire Capital go up and down completely randomly.

Pair Corralation between Presidio Property and Brightspire Capital

Given the investment horizon of 90 days Presidio Property Trust is expected to generate 3.9 times more return on investment than Brightspire Capital. However, Presidio Property is 3.9 times more volatile than Brightspire Capital. It trades about 0.01 of its potential returns per unit of risk. Brightspire Capital is currently generating about 0.01 per unit of risk. If you would invest  70.00  in Presidio Property Trust on November 29, 2024 and sell it today you would lose (5.00) from holding Presidio Property Trust or give up 7.14% of portfolio value over 90 days.

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

Presidio Property Trust  vs.  Brightspire Capital

Presidio Property Trust

Risk-Adjusted Performance

Very Weak

Over the last 90 days Presidio Property Trust has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical and fundamental indicators, Presidio Property is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Brightspire Capital

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Brightspire Capital are ranked lower than 1 (%) 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 Presidio Property and Brightspire Capital

The main advantage of trading using opposite Presidio Property and Brightspire Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Presidio Property 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 Presidio Property Trust 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.