Correlation Between Brightspire Capital and RMR
Can any of the company-specific risk be diversified away by investing in both Brightspire Capital and RMR 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 Brightspire Capital and RMR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Brightspire Capital and RMR Group, you can compare the effects of market volatilities on Brightspire Capital and RMR 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 Brightspire Capital with a short position of RMR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brightspire Capital and RMR.
Diversification Opportunities for Brightspire Capital and RMR
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Brightspire and RMR is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Brightspire Capital and RMR Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RMR Group and Brightspire Capital 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 Brightspire Capital are associated (or correlated) with RMR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RMR Group has no effect on the direction of Brightspire Capital i.e., Brightspire Capital and RMR go up and down completely randomly.
Pair Corralation between Brightspire Capital and RMR
Given the investment horizon of 90 days Brightspire Capital is expected to generate 2.06 times more return on investment than RMR. However, Brightspire Capital is 2.06 times more volatile than RMR Group. It trades about 0.07 of its potential returns per unit of risk. RMR Group is currently generating about -0.12 per unit of risk. If you would invest 571.00 in Brightspire Capital on September 2, 2024 and sell it today you would earn a total of 63.00 from holding Brightspire Capital or generate 11.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Brightspire Capital vs. RMR Group
Performance |
| Timeline |
| Brightspire Capital |
| RMR Group |
Brightspire Capital and RMR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Brightspire Capital and RMR
The main advantage of trading using opposite Brightspire Capital and RMR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brightspire Capital position performs unexpectedly, RMR 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 RMR will offset losses from the drop in RMR's long position.| Brightspire Capital vs. Essential Properties Realty | Brightspire Capital vs. Armada Hflr Pr | Brightspire Capital vs. CTO Realty Growth | Brightspire Capital vs. Modiv Inc |
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.
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