Correlation Between Bridgemarq Real and Vonovia SE

Can any of the company-specific risk be diversified away by investing in both Bridgemarq Real and Vonovia SE 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 Bridgemarq Real and Vonovia SE into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Bridgemarq Real Estate and Vonovia SE ADR, you can compare the effects of market volatilities on Bridgemarq Real and Vonovia SE 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 Bridgemarq Real with a short position of Vonovia SE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bridgemarq Real and Vonovia SE.

Diversification Opportunities for Bridgemarq Real and Vonovia SE

-0.5

Correlation Coefficient

Bridgemarq Real  Vonovia SE

Very good diversification

The 3 months correlation between Bridgemarq and Vonovia is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Bridgemarq Real Estate and Vonovia SE ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vonovia SE ADR and Bridgemarq Real 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 Bridgemarq Real Estate are associated (or correlated) with Vonovia SE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vonovia SE ADR has no effect on the direction of Bridgemarq Real i.e., Bridgemarq Real and Vonovia SE go up and down completely randomly.

Pair Corralation between Bridgemarq Real and Vonovia SE

Assuming the 90 days horizon Bridgemarq Real Estate is expected to under-perform the Vonovia SE. But the pink sheet apears to be less risky and, when comparing its historical volatility, Bridgemarq Real Estate is 1.72 times less risky than Vonovia SE. The pink sheet trades about -0.2 of its potential returns per unit of risk. The Vonovia SE ADR is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest  1,591  in Vonovia SE ADR on September 26, 2024 and sell it today you would lose (47.00) from holding Vonovia SE ADR or give up 2.95% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.45%
Values	Daily Returns

Bridgemarq Real Estate  vs.  Vonovia SE ADR

Bridgemarq Real Estate

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bridgemarq Real Estate has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Bridgemarq Real is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Vonovia SE ADR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vonovia SE ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Bridgemarq Real and Vonovia SE

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

The idea behind Bridgemarq Real Estate and Vonovia SE 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.

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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.