Correlation Between Brighthouse Financial and Donegal Group

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

By analyzing existing cross correlation between Brighthouse Financial and Donegal Group B, you can compare the effects of market volatilities on Brighthouse Financial and Donegal Group 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 Brighthouse Financial with a short position of Donegal Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brighthouse Financial and Donegal Group.

Diversification Opportunities for Brighthouse Financial and Donegal Group

0.34

Correlation Coefficient

Brighthouse Financial  Donegal Group

Weak diversification

The 3 months correlation between Brighthouse and Donegal is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Brighthouse Financial and Donegal Group B in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Donegal Group B and Brighthouse Financial 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 Brighthouse Financial are associated (or correlated) with Donegal Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Donegal Group B has no effect on the direction of Brighthouse Financial i.e., Brighthouse Financial and Donegal Group go up and down completely randomly.

Pair Corralation between Brighthouse Financial and Donegal Group

Assuming the 90 days horizon Brighthouse Financial is expected to generate 0.58 times more return on investment than Donegal Group. However, Brighthouse Financial is 1.71 times less risky than Donegal Group. It trades about -0.08 of its potential returns per unit of risk. Donegal Group B is currently generating about -0.08 per unit of risk. If you would invest  1,543  in Brighthouse Financial on May 6, 2025 and sell it today you would lose (197.00) from holding Brighthouse Financial or give up 12.77% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	74.19%
Values	Daily Returns

Brighthouse Financial  vs.  Donegal Group B

Brighthouse Financial

Risk-Adjusted Performance

Very Weak

Over the last 90 days Brighthouse Financial has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Preferred Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Donegal Group B

Risk-Adjusted Performance

Very Weak

Over the last 90 days Donegal Group B has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's fundamental indicators remain somewhat strong which may send shares a bit higher in September 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Brighthouse Financial and Donegal Group

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

The idea behind Brighthouse Financial and Donegal Group B 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.