Correlation Between Musti Group and Bright Horizons
Can any of the company-specific risk be diversified away by investing in both Musti Group and Bright Horizons 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 Musti Group and Bright Horizons into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Musti Group Oyj and Bright Horizons Family, you can compare the effects of market volatilities on Musti Group and Bright Horizons 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 Musti Group with a short position of Bright Horizons. Check out your portfolio center. Please also check ongoing floating volatility patterns of Musti Group and Bright Horizons.
Diversification Opportunities for Musti Group and Bright Horizons
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Musti and Bright is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Musti Group Oyj and Bright Horizons Family in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bright Horizons Family and Musti Group 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 Musti Group Oyj are associated (or correlated) with Bright Horizons. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bright Horizons Family has no effect on the direction of Musti Group i.e., Musti Group and Bright Horizons go up and down completely randomly.
Pair Corralation between Musti Group and Bright Horizons
Assuming the 90 days horizon Musti Group Oyj is expected to under-perform the Bright Horizons. But the stock apears to be less risky and, when comparing its historical volatility, Musti Group Oyj is 1.29 times less risky than Bright Horizons. The stock trades about -0.16 of its potential returns per unit of risk. The Bright Horizons Family is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 10,800 in Bright Horizons Family on September 13, 2024 and sell it today you would lose (200.00) from holding Bright Horizons Family or give up 1.85% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Musti Group Oyj vs. Bright Horizons Family
Performance |
| Timeline |
| Musti Group Oyj |
| Bright Horizons Family |
Musti Group and Bright Horizons Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Musti Group and Bright Horizons
The main advantage of trading using opposite Musti Group and Bright Horizons positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Musti Group position performs unexpectedly, Bright Horizons 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 Bright Horizons will offset losses from the drop in Bright Horizons' long position.| Musti Group vs. Cass Information Systems | Musti Group vs. NorAm Drilling AS | Musti Group vs. Datang International Power | Musti Group vs. TELES Informationstechnologien AG |
| Bright Horizons vs. Service International | Bright Horizons vs. BOYD GROUP SERVICES | Bright Horizons vs. Frontdoor | Bright Horizons vs. CVS Group plc |
Check out your portfolio center.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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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