Correlation Between Brightspire Capital and CBL Associates

Can any of the company-specific risk be diversified away by investing in both Brightspire Capital and CBL Associates 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 Brightspire Capital and CBL Associates into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Brightspire Capital and CBL Associates Properties, you can compare the effects of market volatilities on Brightspire Capital and CBL Associates 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 Brightspire Capital with a short position of CBL Associates. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brightspire Capital and CBL Associates.

Diversification Opportunities for Brightspire Capital and CBL Associates

0.61

Correlation Coefficient

Brightspire Capital  CBL Associates

Poor diversification

The 3 months correlation between Brightspire and CBL is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Brightspire Capital and CBL Associates Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CBL Associates Properties and Brightspire Capital 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 Brightspire Capital are associated (or correlated) with CBL Associates. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CBL Associates Properties has no effect on the direction of Brightspire Capital i.e., Brightspire Capital and CBL Associates go up and down completely randomly.

Pair Corralation between Brightspire Capital and CBL Associates

Given the investment horizon of 90 days Brightspire Capital is expected to generate 1.2 times less return on investment than CBL Associates. In addition to that, Brightspire Capital is 1.54 times more volatile than CBL Associates Properties. It trades about 0.03 of its total potential returns per unit of risk. CBL Associates Properties is currently generating about 0.05 per unit of volatility. If you would invest  2,296  in CBL Associates Properties on September 2, 2024 and sell it today you would earn a total of  794.00  from holding CBL Associates Properties or generate 34.58% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Brightspire Capital  vs.  CBL Associates Properties

Brightspire Capital

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Brightspire Capital are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively uncertain basic indicators, Brightspire Capital may actually be approaching a critical reversion point that can send shares even higher in January 2025.

CBL Associates Properties

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in CBL Associates Properties are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite quite fragile fundamental drivers, CBL Associates disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Brightspire Capital and CBL Associates

The main advantage of trading using opposite Brightspire Capital and CBL Associates positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brightspire Capital position performs unexpectedly, CBL Associates 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 CBL Associates will offset losses from the drop in CBL Associates' long position.

The idea behind Brightspire Capital and CBL Associates Properties 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.

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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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.