Correlation Between Clipper Realty and BRT Realty

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

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

Diversification Opportunities for Clipper Realty and BRT Realty

0.21

Correlation Coefficient

Clipper Realty  BRT Realty

Modest diversification

The 3 months correlation between Clipper and BRT is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Clipper Realty and BRT Realty Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BRT Realty Trust and Clipper Realty 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 Clipper Realty are associated (or correlated) with BRT Realty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BRT Realty Trust has no effect on the direction of Clipper Realty i.e., Clipper Realty and BRT Realty go up and down completely randomly.

Pair Corralation between Clipper Realty and BRT Realty

Given the investment horizon of 90 days Clipper Realty is expected to under-perform the BRT Realty. In addition to that, Clipper Realty is 2.8 times more volatile than BRT Realty Trust. It trades about -0.02 of its total potential returns per unit of risk. BRT Realty Trust is currently generating about 0.02 per unit of volatility. If you would invest  1,775  in BRT Realty Trust on December 27, 2024 and sell it today you would earn a total of  25.00  from holding BRT Realty Trust or generate 1.41% return on investment over 90 days.

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

Clipper Realty  vs.  BRT Realty Trust

Clipper Realty

Risk-Adjusted Performance

Very Weak

Over the last 90 days Clipper Realty has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Clipper Realty is not utilizing all of its potentials. The newest stock price agitation, may contribute to short-term losses for the retail investors.

BRT Realty Trust

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in BRT Realty Trust are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, BRT Realty is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Clipper Realty and BRT Realty

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

The idea behind Clipper Realty and BRT Realty 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.