Correlation Between Brightsphere Investment and 4 Less

Can any of the company-specific risk be diversified away by investing in both Brightsphere Investment and 4 Less 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 4 Less 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 4 Less Group, you can compare the effects of market volatilities on Brightsphere Investment and 4 Less 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 4 Less. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brightsphere Investment and 4 Less.

Diversification Opportunities for Brightsphere Investment and 4 Less

-0.73

Correlation Coefficient

Brightsphere Investment  4 Less

Pay attention - limited upside

The 3 months correlation between Brightsphere and FLES is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Brightsphere Investment Group and 4 Less Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 4 Less Group 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 4 Less. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 4 Less Group has no effect on the direction of Brightsphere Investment i.e., Brightsphere Investment and 4 Less go up and down completely randomly.

Pair Corralation between Brightsphere Investment and 4 Less

Given the investment horizon of 90 days Brightsphere Investment is expected to generate 12.09 times less return on investment than 4 Less. But when comparing it to its historical volatility, Brightsphere Investment Group is 10.9 times less risky than 4 Less. It trades about 0.04 of its potential returns per unit of risk. 4 Less Group is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  0.04  in 4 Less Group on September 25, 2024 and sell it today you would lose (0.02) from holding 4 Less Group or give up 50.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	96.92%
Values	Daily Returns

Brightsphere Investment Group  vs.  4 Less Group

Brightsphere Investment

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Brightsphere Investment Group are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable forward indicators, Brightsphere Investment is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

4 Less Group

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in 4 Less Group are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent technical and fundamental indicators, 4 Less unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Brightsphere Investment and 4 Less

The main advantage of trading using opposite Brightsphere Investment and 4 Less positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brightsphere Investment position performs unexpectedly, 4 Less 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 4 Less will offset losses from the drop in 4 Less' long position.

The idea behind Brightsphere Investment Group and 4 Less 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.

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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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.