Correlation Between Essential Properties and Brightspire Capital
Can any of the company-specific risk be diversified away by investing in both Essential Properties and Brightspire Capital 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 Essential Properties and Brightspire Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Essential Properties Realty and Brightspire Capital, you can compare the effects of market volatilities on Essential Properties and Brightspire Capital 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 Essential Properties with a short position of Brightspire Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Essential Properties and Brightspire Capital.
Diversification Opportunities for Essential Properties and Brightspire Capital
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Essential and Brightspire is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Essential Properties Realty and Brightspire Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brightspire Capital and Essential Properties 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 Essential Properties Realty are associated (or correlated) with Brightspire Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brightspire Capital has no effect on the direction of Essential Properties i.e., Essential Properties and Brightspire Capital go up and down completely randomly.
Pair Corralation between Essential Properties and Brightspire Capital
Given the investment horizon of 90 days Essential Properties Realty is expected to generate 0.78 times more return on investment than Brightspire Capital. However, Essential Properties Realty is 1.28 times less risky than Brightspire Capital. It trades about -0.02 of its potential returns per unit of risk. Brightspire Capital is currently generating about -0.24 per unit of risk. If you would invest 3,211 in Essential Properties Realty on January 24, 2025 and sell it today you would lose (58.00) from holding Essential Properties Realty or give up 1.81% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Essential Properties Realty vs. Brightspire Capital
Performance |
| Timeline |
| Essential Properties |
| Brightspire Capital |
Essential Properties and Brightspire Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Essential Properties and Brightspire Capital
The main advantage of trading using opposite Essential Properties and Brightspire Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Essential Properties position performs unexpectedly, Brightspire Capital 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 Brightspire Capital will offset losses from the drop in Brightspire Capital's long position.| Essential Properties vs. Armada Hflr Pr | Essential Properties vs. CTO Realty Growth | Essential Properties vs. Brightspire Capital | Essential Properties vs. Broadstone Net Lease |
| 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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