Correlation Between Brightsphere Investment and Pimco Dynamic

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

Diversification Opportunities for Brightsphere Investment and Pimco Dynamic

-0.3

Correlation Coefficient

Brightsphere Investment  Pimco Dynamic

Very good diversification

The 3 months correlation between Brightsphere and Pimco is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Brightsphere Investment Group and Pimco Dynamic Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pimco Dynamic Income 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 Pimco Dynamic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pimco Dynamic Income has no effect on the direction of Brightsphere Investment i.e., Brightsphere Investment and Pimco Dynamic go up and down completely randomly.

Pair Corralation between Brightsphere Investment and Pimco Dynamic

Given the investment horizon of 90 days Brightsphere Investment Group is expected to generate 2.92 times more return on investment than Pimco Dynamic. However, Brightsphere Investment is 2.92 times more volatile than Pimco Dynamic Income. It trades about 0.42 of its potential returns per unit of risk. Pimco Dynamic Income is currently generating about 0.07 per unit of risk. If you would invest  2,637  in Brightsphere Investment Group on August 31, 2024 and sell it today you would earn a total of  484.00  from holding Brightsphere Investment Group or generate 18.35% return on investment over 90 days.

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

Brightsphere Investment Group  vs.  Pimco Dynamic Income

Brightsphere Investment

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Brightsphere Investment Group are ranked lower than 19 (%) 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.

Pimco Dynamic Income

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Pimco Dynamic Income are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy fundamental indicators, Pimco Dynamic is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Brightsphere Investment and Pimco Dynamic

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

The idea behind Brightsphere Investment Group and Pimco Dynamic Income 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.