Correlation Between Brightspire Capital and Inland Real

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

By analyzing existing cross correlation between Brightspire Capital and Inland Real Estateome, you can compare the effects of market volatilities on Brightspire Capital and Inland Real 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 Inland Real. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brightspire Capital and Inland Real.

Diversification Opportunities for Brightspire Capital and Inland Real

0.21

Correlation Coefficient

Brightspire Capital  Inland Real

Modest diversification

The 3 months correlation between Brightspire and Inland is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Brightspire Capital and Inland Real Estateome in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inland Real Estateome 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 Inland Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inland Real Estateome has no effect on the direction of Brightspire Capital i.e., Brightspire Capital and Inland Real go up and down completely randomly.

Pair Corralation between Brightspire Capital and Inland Real

Given the investment horizon of 90 days Brightspire Capital is expected to generate 1.06 times more return on investment than Inland Real. However, Brightspire Capital is 1.06 times more volatile than Inland Real Estateome. It trades about 0.07 of its potential returns per unit of risk. Inland Real Estateome is currently generating about 0.03 per unit of risk. If you would invest  571.00  in Brightspire Capital on September 3, 2024 and sell it today you would earn a total of  63.00  from holding Brightspire Capital or generate 11.03% return on investment over 90 days.

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

Brightspire Capital  vs.  Inland Real Estateome

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.

Inland Real Estateome

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Inland Real Estateome are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Inland Real is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Brightspire Capital and Inland Real

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

The idea behind Brightspire Capital and Inland Real Estateome 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.