Correlation Between Snap and Brightsphere Investment
Can any of the company-specific risk be diversified away by investing in both Snap and Brightsphere Investment 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 Snap and Brightsphere Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Snap Inc and Brightsphere Investment Group, you can compare the effects of market volatilities on Snap and Brightsphere Investment 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 Snap with a short position of Brightsphere Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Snap and Brightsphere Investment.
Diversification Opportunities for Snap and Brightsphere Investment
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Snap and Brightsphere is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Snap Inc and Brightsphere Investment Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brightsphere Investment and Snap 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 Snap Inc are associated (or correlated) with Brightsphere Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brightsphere Investment has no effect on the direction of Snap i.e., Snap and Brightsphere Investment go up and down completely randomly.
Pair Corralation between Snap and Brightsphere Investment
Given the investment horizon of 90 days Snap is expected to generate 1.61 times less return on investment than Brightsphere Investment. In addition to that, Snap is 2.47 times more volatile than Brightsphere Investment Group. It trades about 0.1 of its total potential returns per unit of risk. Brightsphere Investment Group is currently generating about 0.41 per unit of volatility. If you would invest 2,644 in Brightsphere Investment Group on August 28, 2024 and sell it today you would earn a total of 456.00 from holding Brightsphere Investment Group or generate 17.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Snap Inc vs. Brightsphere Investment Group
Performance |
| Timeline |
| Snap Inc |
| Brightsphere Investment |
Snap and Brightsphere Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Snap and Brightsphere Investment
The main advantage of trading using opposite Snap and Brightsphere Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Snap position performs unexpectedly, Brightsphere Investment 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 Brightsphere Investment will offset losses from the drop in Brightsphere Investment's long position.The idea behind Snap Inc and Brightsphere Investment Group pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
Other Complementary Tools
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital |