Correlation Between BrightSpring Health and Dow Jones
Can any of the company-specific risk be diversified away by investing in both BrightSpring Health and Dow Jones 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 BrightSpring Health and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BrightSpring Health Services, and Dow Jones Industrial, you can compare the effects of market volatilities on BrightSpring Health and Dow Jones 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 BrightSpring Health with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of BrightSpring Health and Dow Jones.
Diversification Opportunities for BrightSpring Health and Dow Jones
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between BrightSpring and Dow is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding BrightSpring Health Services, and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial and BrightSpring Health 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 BrightSpring Health Services, are associated (or correlated) with Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of BrightSpring Health i.e., BrightSpring Health and Dow Jones go up and down completely randomly.
Pair Corralation between BrightSpring Health and Dow Jones
Assuming the 90 days horizon BrightSpring Health Services, is expected to generate 2.83 times more return on investment than Dow Jones. However, BrightSpring Health is 2.83 times more volatile than Dow Jones Industrial. It trades about 0.18 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.16 per unit of risk. If you would invest 4,485 in BrightSpring Health Services, on September 1, 2024 and sell it today you would earn a total of 2,628 from holding BrightSpring Health Services, or generate 58.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
BrightSpring Health Services, vs. Dow Jones Industrial
Performance |
| Timeline |
BrightSpring Health and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
BrightSpring Health Services,
Pair trading matchups for BrightSpring Health
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with BrightSpring Health and Dow Jones
The main advantage of trading using opposite BrightSpring Health and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BrightSpring Health position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' long position.| BrightSpring Health vs. Western Digital | BrightSpring Health vs. Dennys Corp | BrightSpring Health vs. Pinterest | BrightSpring Health vs. Bt Brands |
| Dow Jones vs. Catalyst Pharmaceuticals | Dow Jones vs. Sphere Entertainment Co | Dow Jones vs. National CineMedia | Dow Jones vs. Mink Therapeutics |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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