Correlation Between Bluerock Homes and UMH Properties

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

Diversification Opportunities for Bluerock Homes and UMH Properties

0.49

Correlation Coefficient

Bluerock Homes  UMH Properties

Very weak diversification

The 3 months correlation between Bluerock and UMH is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Bluerock Homes Trust and UMH Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UMH Properties 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 UMH Properties. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UMH Properties has no effect on the direction of Bluerock Homes i.e., Bluerock Homes and UMH Properties go up and down completely randomly.

Pair Corralation between Bluerock Homes and UMH Properties

Considering the 90-day investment horizon Bluerock Homes Trust is expected to under-perform the UMH Properties. In addition to that, Bluerock Homes is 2.43 times more volatile than UMH Properties. It trades about -0.14 of its total potential returns per unit of risk. UMH Properties is currently generating about 0.0 per unit of volatility. If you would invest  2,274  in UMH Properties on December 20, 2024 and sell it today you would earn a total of  0.00  from holding UMH Properties or generate 0.0% return on investment over 90 days.

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

Bluerock Homes Trust  vs.  UMH Properties

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.

UMH Properties

Risk-Adjusted Performance

Very Weak

Over the last 90 days UMH Properties has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical indicators, UMH Properties is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Bluerock Homes and UMH Properties

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

The idea behind Bluerock Homes Trust and UMH Properties 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.