Correlation Between Brightsphere Investment and Avantax

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

By analyzing existing cross correlation between Brightsphere Investment Group and Avantax, you can compare the effects of market volatilities on Brightsphere Investment and Avantax 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 Brightsphere Investment with a short position of Avantax. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brightsphere Investment and Avantax.

Diversification Opportunities for Brightsphere Investment and Avantax

0.23

Correlation Coefficient

Brightsphere Investment  Avantax

Modest diversification

The 3 months correlation between Brightsphere and Avantax is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Brightsphere Investment Group and Avantax in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avantax and Brightsphere Investment 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 Brightsphere Investment Group are associated (or correlated) with Avantax. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Avantax has no effect on the direction of Brightsphere Investment i.e., Brightsphere Investment and Avantax go up and down completely randomly.

Pair Corralation between Brightsphere Investment and Avantax

If you would invest  2,438  in Brightsphere Investment Group on August 30, 2024 and sell it today you would earn a total of  683.00  from holding Brightsphere Investment Group or generate 28.01% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	1.56%
Values	Daily Returns

Brightsphere Investment Group  vs.  Avantax

Brightsphere Investment

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Brightsphere Investment Group are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak forward indicators, Brightsphere Investment reported solid returns over the last few months and may actually be approaching a breakup point.

Avantax

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Avantax has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Avantax is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Brightsphere Investment and Avantax

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

The idea behind Brightsphere Investment Group and Avantax 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.