Correlation Between Bluerock Homes and Dream Residential

Can any of the company-specific risk be diversified away by investing in both Bluerock Homes and Dream Residential 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 Dream Residential 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 Dream Residential Real, you can compare the effects of market volatilities on Bluerock Homes and Dream Residential 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 Dream Residential. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bluerock Homes and Dream Residential.

Diversification Opportunities for Bluerock Homes and Dream Residential

-0.38

Correlation Coefficient

Bluerock Homes  Dream Residential

Very good diversification

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

Pair Corralation between Bluerock Homes and Dream Residential

Considering the 90-day investment horizon Bluerock Homes Trust is expected to under-perform the Dream Residential. But the stock apears to be less risky and, when comparing its historical volatility, Bluerock Homes Trust is 2.36 times less risky than Dream Residential. The stock trades about -0.13 of its potential returns per unit of risk. The Dream Residential Real is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  650.00  in Dream Residential Real on December 21, 2024 and sell it today you would earn a total of  240.00  from holding Dream Residential Real or generate 36.92% 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.  Dream Residential Real

Bluerock Homes Trust

Risk-Adjusted Performance

Very Weak

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

Dream Residential Real

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Dream Residential Real are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak technical and fundamental indicators, Dream Residential reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bluerock Homes and Dream Residential

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

The idea behind Bluerock Homes Trust and Dream Residential Real 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.