Correlation Between Brighthouse Financial and Reinsurance Group
Can any of the company-specific risk be diversified away by investing in both Brighthouse Financial and Reinsurance Group 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 Brighthouse Financial and Reinsurance Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Brighthouse Financial and Reinsurance Group of, you can compare the effects of market volatilities on Brighthouse Financial and Reinsurance Group 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 Brighthouse Financial with a short position of Reinsurance Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brighthouse Financial and Reinsurance Group.
Diversification Opportunities for Brighthouse Financial and Reinsurance Group
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Brighthouse and Reinsurance is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Brighthouse Financial and Reinsurance Group of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Reinsurance Group and Brighthouse Financial 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 Brighthouse Financial are associated (or correlated) with Reinsurance Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Reinsurance Group has no effect on the direction of Brighthouse Financial i.e., Brighthouse Financial and Reinsurance Group go up and down completely randomly.
Pair Corralation between Brighthouse Financial and Reinsurance Group
Assuming the 90 days horizon Brighthouse Financial is expected to generate 2.5 times more return on investment than Reinsurance Group. However, Brighthouse Financial is 2.5 times more volatile than Reinsurance Group of. It trades about 0.02 of its potential returns per unit of risk. Reinsurance Group of is currently generating about 0.03 per unit of risk. If you would invest 2,201 in Brighthouse Financial on August 27, 2024 and sell it today you would earn a total of 240.00 from holding Brighthouse Financial or generate 10.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Brighthouse Financial vs. Reinsurance Group of
Performance |
| Timeline |
| Brighthouse Financial |
| Reinsurance Group |
Brighthouse Financial and Reinsurance Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Brighthouse Financial and Reinsurance Group
The main advantage of trading using opposite Brighthouse Financial and Reinsurance Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brighthouse Financial position performs unexpectedly, Reinsurance Group 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 Reinsurance Group will offset losses from the drop in Reinsurance Group's long position.| Brighthouse Financial vs. American Financial Group | Brighthouse Financial vs. CMS Energy Corp | Brighthouse Financial vs. Reinsurance Group of |
| Reinsurance Group vs. Southern Co | Reinsurance Group vs. Stifel Financial | Reinsurance Group vs. Entergy New Orleans | Reinsurance Group vs. Entergy Arkansas LLC |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
Other Complementary Tools
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets |