Correlation Between BSR Real and Bluerock Homes

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

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

Diversification Opportunities for BSR Real and Bluerock Homes

0.51

Correlation Coefficient

BSR Real  Bluerock Homes

Very weak diversification

The 3 months correlation between BSR and Bluerock is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding BSR Real Estate and Bluerock Homes Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bluerock Homes Trust and BSR 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 BSR Real Estate are associated (or correlated) with Bluerock Homes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bluerock Homes Trust has no effect on the direction of BSR Real i.e., BSR Real and Bluerock Homes go up and down completely randomly.

Pair Corralation between BSR Real and Bluerock Homes

Assuming the 90 days horizon BSR Real Estate is expected to generate 0.67 times more return on investment than Bluerock Homes. However, BSR Real Estate is 1.48 times less risky than Bluerock Homes. It trades about -0.16 of its potential returns per unit of risk. Bluerock Homes Trust is currently generating about -0.21 per unit of risk. If you would invest  1,376  in BSR Real Estate on October 8, 2024 and sell it today you would lose (140.00) from holding BSR Real Estate or give up 10.17% of portfolio value over 90 days.

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

BSR Real Estate  vs.  Bluerock Homes Trust

BSR Real Estate

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BSR Real Estate has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

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 uncertain performance in the last few months, the Stock's technical indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with BSR Real and Bluerock Homes

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

The idea behind BSR Real Estate and Bluerock Homes 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.

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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.