Correlation Between Brightsphere Investment and TRIMBLE

Can any of the company-specific risk be diversified away by investing in both Brightsphere Investment and TRIMBLE 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 TRIMBLE 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 TRIMBLE INC 475, you can compare the effects of market volatilities on Brightsphere Investment and TRIMBLE 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 TRIMBLE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brightsphere Investment and TRIMBLE.

Diversification Opportunities for Brightsphere Investment and TRIMBLE

-0.04

Correlation Coefficient

Brightsphere Investment  TRIMBLE

Good diversification

The 3 months correlation between Brightsphere and TRIMBLE is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Brightsphere Investment Group and TRIMBLE INC 475 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TRIMBLE INC 475 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 TRIMBLE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TRIMBLE INC 475 has no effect on the direction of Brightsphere Investment i.e., Brightsphere Investment and TRIMBLE go up and down completely randomly.

Pair Corralation between Brightsphere Investment and TRIMBLE

Given the investment horizon of 90 days Brightsphere Investment Group is expected to generate 6.18 times more return on investment than TRIMBLE. However, Brightsphere Investment is 6.18 times more volatile than TRIMBLE INC 475. It trades about 0.06 of its potential returns per unit of risk. TRIMBLE INC 475 is currently generating about -0.01 per unit of risk. If you would invest  2,539  in Brightsphere Investment Group on September 28, 2024 and sell it today you would earn a total of  151.00  from holding Brightsphere Investment Group or generate 5.95% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	60.32%
Values	Daily Returns

Brightsphere Investment Group  vs.  TRIMBLE INC 475

Brightsphere Investment

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Brightsphere Investment Group are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak forward indicators, Brightsphere Investment may actually be approaching a critical reversion point that can send shares even higher in January 2025.

TRIMBLE INC 475

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days TRIMBLE INC 475 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, TRIMBLE is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Brightsphere Investment and TRIMBLE

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

The idea behind Brightsphere Investment Group and TRIMBLE INC 475 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.