Correlation Between Brightsphere Investment and Focus Financial
Can any of the company-specific risk be diversified away by investing in both Brightsphere Investment and Focus Financial 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 Focus Financial 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 Focus Financial Partners, you can compare the effects of market volatilities on Brightsphere Investment and Focus Financial 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 Focus Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brightsphere Investment and Focus Financial.
Diversification Opportunities for Brightsphere Investment and Focus Financial
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Brightsphere and Focus is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Brightsphere Investment Group and Focus Financial Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Focus Financial Partners 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 Focus Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Focus Financial Partners has no effect on the direction of Brightsphere Investment i.e., Brightsphere Investment and Focus Financial go up and down completely randomly.
Pair Corralation between Brightsphere Investment and Focus Financial
If you would invest 5,216 in Focus Financial Partners on October 20, 2024 and sell it today you would earn a total of 0.00 from holding Focus Financial Partners or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 11.11% |
| Values | Daily Returns |
Brightsphere Investment Group vs. Focus Financial Partners
Performance |
| Timeline |
| Brightsphere Investment |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Weak
| Focus Financial Partners |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Brightsphere Investment and Focus Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Brightsphere Investment and Focus Financial
The main advantage of trading using opposite Brightsphere Investment and Focus Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brightsphere Investment position performs unexpectedly, Focus Financial 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 Focus Financial will offset losses from the drop in Focus Financial's long position.The idea behind Brightsphere Investment Group and Focus Financial Partners 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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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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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