Correlation Between Midwest Holding and Brighthouse Financial
Can any of the company-specific risk be diversified away by investing in both Midwest Holding 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 Midwest Holding and Brighthouse Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Midwest Holding and Brighthouse Financial, you can compare the effects of market volatilities on Midwest Holding 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 Midwest Holding with a short position of Brighthouse Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Midwest Holding and Brighthouse Financial.
Diversification Opportunities for Midwest Holding and Brighthouse Financial
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between Midwest and Brighthouse is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Midwest Holding and Brighthouse Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brighthouse Financial and Midwest Holding 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 Midwest Holding 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 Midwest Holding i.e., Midwest Holding and Brighthouse Financial go up and down completely randomly.
Pair Corralation between Midwest Holding and Brighthouse Financial
Given the investment horizon of 90 days Midwest Holding is expected to under-perform the Brighthouse Financial. But the stock apears to be less risky and, when comparing its historical volatility, Midwest Holding is 4.3 times less risky than Brighthouse Financial. The stock trades about -0.12 of its potential returns per unit of risk. The Brighthouse Financial is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 2,138 in Brighthouse Financial on August 28, 2024 and sell it today you would earn a total of 320.00 from holding Brighthouse Financial or generate 14.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 4.24% |
| Values | Daily Returns |
Midwest Holding vs. Brighthouse Financial
Performance |
| Timeline |
| Midwest Holding |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Brighthouse Financial |
Midwest Holding and Brighthouse Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Midwest Holding and Brighthouse Financial
The main advantage of trading using opposite Midwest Holding and Brighthouse Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Midwest Holding 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.| Midwest Holding vs. Brighthouse Financial | Midwest Holding vs. Brighthouse Financial | Midwest Holding vs. FG Annuities Life | Midwest Holding vs. CNO Financial Group |
| Brighthouse Financial vs. Brighthouse Financial | Brighthouse Financial vs. Brighthouse Financial | Brighthouse Financial vs. Fifth Third Bancorp | Brighthouse Financial vs. First Citizens BancShares |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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