Correlation Between Global Net and Brightspire Capital
Can any of the company-specific risk be diversified away by investing in both Global Net 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 Global Net and Brightspire Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global Net Lease and Brightspire Capital, you can compare the effects of market volatilities on Global Net 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 Global Net with a short position of Brightspire Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Net and Brightspire Capital.
Diversification Opportunities for Global Net and Brightspire Capital
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Global and Brightspire is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Global Net Lease and Brightspire Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brightspire Capital and Global Net 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 Global Net Lease 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 Global Net i.e., Global Net and Brightspire Capital go up and down completely randomly.
Pair Corralation between Global Net and Brightspire Capital
Assuming the 90 days trading horizon Global Net Lease is expected to generate 0.75 times more return on investment than Brightspire Capital. However, Global Net Lease is 1.34 times less risky than Brightspire Capital. It trades about 0.04 of its potential returns per unit of risk. Brightspire Capital is currently generating about 0.03 per unit of risk. If you would invest 1,720 in Global Net Lease on September 3, 2024 and sell it today you would earn a total of 495.00 from holding Global Net Lease or generate 28.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Global Net Lease vs. Brightspire Capital
Performance |
| Timeline |
| Global Net Lease |
| Brightspire Capital |
Global Net and Brightspire Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global Net and Brightspire Capital
The main advantage of trading using opposite Global Net and Brightspire Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Net 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.| Global Net vs. Global Net Lease | Global Net vs. Global Medical REIT | Global Net vs. City Office REIT | Global Net vs. ARMOUR Residential REIT |
| 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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