Correlation Between STRYKER and Brightsphere Investment

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

By analyzing existing cross correlation between STRYKER P 35 and Brightsphere Investment Group, you can compare the effects of market volatilities on STRYKER 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 STRYKER with a short position of Brightsphere Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of STRYKER and Brightsphere Investment.

Diversification Opportunities for STRYKER and Brightsphere Investment

-0.15

Correlation Coefficient

STRYKER  Brightsphere Investment

Good diversification

The 3 months correlation between STRYKER and Brightsphere is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding STRYKER P 35 and Brightsphere Investment Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brightsphere Investment and STRYKER 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 STRYKER P 35 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 STRYKER i.e., STRYKER and Brightsphere Investment go up and down completely randomly.

Pair Corralation between STRYKER and Brightsphere Investment

Assuming the 90 days trading horizon STRYKER P 35 is expected to under-perform the Brightsphere Investment. But the bond apears to be less risky and, when comparing its historical volatility, STRYKER P 35 is 14.71 times less risky than Brightsphere Investment. The bond trades about -0.02 of its potential returns per unit of risk. The Brightsphere Investment Group is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  2,659  in Brightsphere Investment Group on October 13, 2024 and sell it today you would lose (25.00) from holding Brightsphere Investment Group or give up 0.94% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	91.8%
Values	Daily Returns

STRYKER P 35  vs.  Brightsphere Investment Group

STRYKER P 35

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days STRYKER P 35 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, STRYKER is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Brightsphere Investment

Risk-Adjusted Performance

0 of 100

Very 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 STRYKER and Brightsphere Investment

The main advantage of trading using opposite STRYKER and Brightsphere Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if STRYKER 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 STRYKER P 35 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 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.