Correlation Between Brightsphere Investment and Blackrock Muni

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

Diversification Opportunities for Brightsphere Investment and Blackrock Muni

0.38

Correlation Coefficient

Brightsphere Investment  Blackrock Muni

Weak diversification

The 3 months correlation between Brightsphere and Blackrock is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Brightsphere Investment Group and Blackrock Muni Intermediate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blackrock Muni Inter 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 Blackrock Muni. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blackrock Muni Inter has no effect on the direction of Brightsphere Investment i.e., Brightsphere Investment and Blackrock Muni go up and down completely randomly.

Pair Corralation between Brightsphere Investment and Blackrock Muni

Given the investment horizon of 90 days Brightsphere Investment Group is expected to under-perform the Blackrock Muni. In addition to that, Brightsphere Investment is 1.81 times more volatile than Blackrock Muni Intermediate. It trades about -0.07 of its total potential returns per unit of risk. Blackrock Muni Intermediate is currently generating about -0.02 per unit of volatility. If you would invest  1,168  in Blackrock Muni Intermediate on February 5, 2024 and sell it today you would lose (4.00) from holding Blackrock Muni Intermediate or give up 0.34% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Brightsphere Investment Group  vs.  Blackrock Muni Intermediate

Brightsphere Investment

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Brightsphere Investment Group are ranked lower than 7 (%) 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 June 2024.

Blackrock Muni Inter

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Blackrock Muni Intermediate are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. Despite fairly strong basic indicators, Blackrock Muni is not utilizing all of its potentials. The newest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Brightsphere Investment and Blackrock Muni

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

The idea behind Brightsphere Investment Group and Blackrock Muni Intermediate 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.