Correlation Between Bluerock Homes and Cedar Realty

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

By analyzing existing cross correlation between Bluerock Homes Trust and Cedar Realty Trust, you can compare the effects of market volatilities on Bluerock Homes and Cedar Realty 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 Bluerock Homes with a short position of Cedar Realty. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bluerock Homes and Cedar Realty.

Diversification Opportunities for Bluerock Homes and Cedar Realty

-0.01

Correlation Coefficient

Bluerock Homes  Cedar Realty

Good diversification

The 3 months correlation between Bluerock and Cedar is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Bluerock Homes Trust and Cedar Realty Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cedar Realty Trust and Bluerock Homes 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 Bluerock Homes Trust are associated (or correlated) with Cedar Realty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cedar Realty Trust has no effect on the direction of Bluerock Homes i.e., Bluerock Homes and Cedar Realty go up and down completely randomly.

Pair Corralation between Bluerock Homes and Cedar Realty

Considering the 90-day investment horizon Bluerock Homes is expected to generate 9.82 times less return on investment than Cedar Realty. But when comparing it to its historical volatility, Bluerock Homes Trust is 1.21 times less risky than Cedar Realty. It trades about 0.01 of its potential returns per unit of risk. Cedar Realty Trust is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  1,399  in Cedar Realty Trust on September 13, 2024 and sell it today you would earn a total of  249.00  from holding Cedar Realty Trust or generate 17.8% return on investment over 90 days.

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

Bluerock Homes Trust  vs.  Cedar Realty Trust

Bluerock Homes Trust

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Bluerock Homes Trust are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy technical indicators, Bluerock Homes is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Cedar Realty Trust

Risk-Adjusted Performance

8 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Cedar Realty Trust are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat sluggish basic indicators, Cedar Realty sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bluerock Homes and Cedar Realty

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

The idea behind Bluerock Homes Trust and Cedar Realty Trust 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.

Check out your portfolio center.

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 CEOs Directory module to screen CEOs from public companies around the world.