Correlation Between Safe and Brightspire Capital

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

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

Diversification Opportunities for Safe and Brightspire Capital

-0.43

Correlation Coefficient

Safe  Brightspire Capital

Very good diversification

The 3 months correlation between Safe and Brightspire is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Safe and Green and Brightspire Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brightspire Capital and Safe 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 Safe and Green are associated (or correlated) with Brightspire Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brightspire Capital has no effect on the direction of Safe i.e., Safe and Brightspire Capital go up and down completely randomly.

Pair Corralation between Safe and Brightspire Capital

Considering the 90-day investment horizon Safe and Green is expected to under-perform the Brightspire Capital. In addition to that, Safe is 5.03 times more volatile than Brightspire Capital. It trades about -0.05 of its total potential returns per unit of risk. Brightspire Capital is currently generating about 0.01 per unit of volatility. If you would invest  638.00  in Brightspire Capital on September 4, 2024 and sell it today you would lose (4.00) from holding Brightspire Capital or give up 0.63% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	99.6%
Values	Daily Returns

Safe and Green  vs.  Brightspire Capital

Safe and Green

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Safe and Green has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Brightspire Capital

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Brightspire Capital are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Even with relatively uncertain basic indicators, Brightspire Capital reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Safe and Brightspire Capital

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

The idea behind Safe and Green and Brightspire Capital 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.