Correlation Between EON Resources and Brighthouse Financial
Can any of the company-specific risk be diversified away by investing in both EON Resources and Brighthouse 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 EON Resources and Brighthouse Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EON Resources and Brighthouse Financial, you can compare the effects of market volatilities on EON Resources and Brighthouse 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 EON Resources with a short position of Brighthouse Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of EON Resources and Brighthouse Financial.
Diversification Opportunities for EON Resources and Brighthouse Financial
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between EON and Brighthouse is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding EON Resources and Brighthouse Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brighthouse Financial and EON Resources 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 EON Resources are associated (or correlated) with Brighthouse Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brighthouse Financial has no effect on the direction of EON Resources i.e., EON Resources and Brighthouse Financial go up and down completely randomly.
Pair Corralation between EON Resources and Brighthouse Financial
Given the investment horizon of 90 days EON Resources is expected to under-perform the Brighthouse Financial. In addition to that, EON Resources is 8.92 times more volatile than Brighthouse Financial. It trades about -0.29 of its total potential returns per unit of risk. Brighthouse Financial is currently generating about -0.08 per unit of volatility. If you would invest 2,488 in Brighthouse Financial on August 31, 2024 and sell it today you would lose (31.00) from holding Brighthouse Financial or give up 1.25% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
EON Resources vs. Brighthouse Financial
Performance |
| Timeline |
| EON Resources |
| Brighthouse Financial |
EON Resources and Brighthouse Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EON Resources and Brighthouse Financial
The main advantage of trading using opposite EON Resources and Brighthouse Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EON Resources position performs unexpectedly, Brighthouse 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 Brighthouse Financial will offset losses from the drop in Brighthouse Financial's long position.| EON Resources vs. BCB Bancorp | EON Resources vs. China Aircraft Leasing | EON Resources vs. Siriuspoint | EON Resources vs. Avis Budget Group |
| Brighthouse Financial vs. Brighthouse Financial | Brighthouse Financial vs. Unum Group | Brighthouse Financial vs. Argo Group 65 | Brighthouse Financial vs. Arch Capital Group |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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