Correlation Between Brightsphere Investment and Federated Premier
Can any of the company-specific risk be diversified away by investing in both Brightsphere Investment and Federated Premier 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 Brightsphere Investment and Federated Premier into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Brightsphere Investment Group and Federated Premier Municipal, you can compare the effects of market volatilities on Brightsphere Investment and Federated Premier 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 Brightsphere Investment with a short position of Federated Premier. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brightsphere Investment and Federated Premier.
Diversification Opportunities for Brightsphere Investment and Federated Premier
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Brightsphere and Federated is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Brightsphere Investment Group and Federated Premier Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Premier and Brightsphere Investment 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 Brightsphere Investment Group are associated (or correlated) with Federated Premier. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Premier has no effect on the direction of Brightsphere Investment i.e., Brightsphere Investment and Federated Premier go up and down completely randomly.
Pair Corralation between Brightsphere Investment and Federated Premier
Given the investment horizon of 90 days Brightsphere Investment Group is expected to under-perform the Federated Premier. In addition to that, Brightsphere Investment is 2.32 times more volatile than Federated Premier Municipal. It trades about -0.16 of its total potential returns per unit of risk. Federated Premier Municipal is currently generating about 0.26 per unit of volatility. If you would invest 1,088 in Federated Premier Municipal on October 24, 2024 and sell it today you would earn a total of 28.00 from holding Federated Premier Municipal or generate 2.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 38.89% |
| Values | Daily Returns |
Brightsphere Investment Group vs. Federated Premier Municipal
Performance |
| Timeline |
| Brightsphere Investment |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Weak
| Federated Premier |
Brightsphere Investment and Federated Premier Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Brightsphere Investment and Federated Premier
The main advantage of trading using opposite Brightsphere Investment and Federated Premier positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brightsphere Investment position performs unexpectedly, Federated Premier 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 Federated Premier will offset losses from the drop in Federated Premier's long position.The idea behind Brightsphere Investment Group and Federated Premier Municipal 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.
| Federated Premier vs. MFS Investment Grade | Federated Premier vs. Eaton Vance Municipal | Federated Premier vs. DTF Tax Free |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
Other Complementary Tools
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
| Positions Ratings 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 | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like |