Correlation Between Bluerock Homes and Nomura Holdings

Can any of the company-specific risk be diversified away by investing in both Bluerock Homes and Nomura 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 Bluerock Homes and Nomura Holdings 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 Nomura Holdings ADR, you can compare the effects of market volatilities on Bluerock Homes and Nomura 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 Bluerock Homes with a short position of Nomura Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bluerock Homes and Nomura Holdings.

Diversification Opportunities for Bluerock Homes and Nomura Holdings

-0.54

Correlation Coefficient

Bluerock Homes  Nomura Holdings

Excellent diversification

The 3 months correlation between Bluerock and Nomura is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Bluerock Homes Trust and Nomura Holdings ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nomura Holdings ADR 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 Nomura Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nomura Holdings ADR has no effect on the direction of Bluerock Homes i.e., Bluerock Homes and Nomura Holdings go up and down completely randomly.

Pair Corralation between Bluerock Homes and Nomura Holdings

Considering the 90-day investment horizon Bluerock Homes Trust is expected to generate 1.12 times more return on investment than Nomura Holdings. However, Bluerock Homes is 1.12 times more volatile than Nomura Holdings ADR. It trades about -0.08 of its potential returns per unit of risk. Nomura Holdings ADR is currently generating about -0.18 per unit of risk. If you would invest  1,375  in Bluerock Homes Trust on September 25, 2024 and sell it today you would lose (36.00) from holding Bluerock Homes Trust or give up 2.62% of portfolio value over 90 days.

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

Bluerock Homes Trust  vs.  Nomura Holdings ADR

Bluerock Homes Trust

Risk-Adjusted Performance

0 of 100

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.

Nomura Holdings ADR

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Nomura Holdings ADR are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak primary indicators, Nomura Holdings may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Bluerock Homes and Nomura Holdings

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

The idea behind Bluerock Homes Trust and Nomura Holdings ADR 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.