Correlation Between Performant Financial and BrightView Holdings

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

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

Diversification Opportunities for Performant Financial and BrightView Holdings

-0.06

Correlation Coefficient

Performant Financial  BrightView Holdings

Good diversification

The 3 months correlation between Performant and BrightView is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Performant Financial and BrightView Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BrightView Holdings and Performant 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 Performant Financial are associated (or correlated) with BrightView Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BrightView Holdings has no effect on the direction of Performant Financial i.e., Performant Financial and BrightView Holdings go up and down completely randomly.

Pair Corralation between Performant Financial and BrightView Holdings

Given the investment horizon of 90 days Performant Financial is expected to under-perform the BrightView Holdings. In addition to that, Performant Financial is 1.26 times more volatile than BrightView Holdings. It trades about -0.22 of its total potential returns per unit of risk. BrightView Holdings is currently generating about 0.07 per unit of volatility. If you would invest  1,643  in BrightView Holdings on August 29, 2024 and sell it today you would earn a total of  69.00  from holding BrightView Holdings or generate 4.2% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Performant Financial  vs.  BrightView Holdings

Performant Financial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Performant Financial has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's primary indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

BrightView Holdings

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in BrightView Holdings are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, BrightView Holdings may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Performant Financial and BrightView Holdings

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

The idea behind Performant Financial and BrightView 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.