Correlation Between Brighthouse Financial and Atlanticus Holdings

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

By analyzing existing cross correlation between Brighthouse Financial and Atlanticus Holdings, you can compare the effects of market volatilities on Brighthouse Financial and Atlanticus Holdings 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 Atlanticus Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brighthouse Financial and Atlanticus Holdings.

Diversification Opportunities for Brighthouse Financial and Atlanticus Holdings

0.05

Correlation Coefficient

Brighthouse Financial  Atlanticus Holdings

Significant diversification

The 3 months correlation between Brighthouse and Atlanticus is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Brighthouse Financial and Atlanticus Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Atlanticus Holdings 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 Atlanticus Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Atlanticus Holdings has no effect on the direction of Brighthouse Financial i.e., Brighthouse Financial and Atlanticus Holdings go up and down completely randomly.

Pair Corralation between Brighthouse Financial and Atlanticus Holdings

Assuming the 90 days horizon Brighthouse Financial is expected to under-perform the Atlanticus Holdings. In addition to that, Brighthouse Financial is 1.05 times more volatile than Atlanticus Holdings. It trades about -0.08 of its total potential returns per unit of risk. Atlanticus Holdings is currently generating about -0.07 per unit of volatility. If you would invest  5,444  in Atlanticus Holdings on May 6, 2025 and sell it today you would lose (642.00) from holding Atlanticus Holdings or give up 11.79% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

Brighthouse Financial  vs.  Atlanticus Holdings

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 weak performance in the last few months, the Preferred Stock's basic indicators remain very healthy which may send shares a bit higher in September 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Atlanticus Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Atlanticus Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's essential indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Brighthouse Financial and Atlanticus Holdings

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

The idea behind Brighthouse Financial and Atlanticus Holdings 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.