Correlation Between CoStar and Bridgemarq Real

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

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

Diversification Opportunities for CoStar and Bridgemarq Real

0.06

Correlation Coefficient

CoStar  Bridgemarq Real

Significant diversification

The 3 months correlation between CoStar and Bridgemarq is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding CoStar Group and Bridgemarq Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bridgemarq Real Estate and CoStar 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 CoStar Group are associated (or correlated) with Bridgemarq Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bridgemarq Real Estate has no effect on the direction of CoStar i.e., CoStar and Bridgemarq Real go up and down completely randomly.

Pair Corralation between CoStar and Bridgemarq Real

Given the investment horizon of 90 days CoStar Group is expected to under-perform the Bridgemarq Real. In addition to that, CoStar is 1.52 times more volatile than Bridgemarq Real Estate. It trades about -0.02 of its total potential returns per unit of risk. Bridgemarq Real Estate is currently generating about 0.08 per unit of volatility. If you would invest  988.00  in Bridgemarq Real Estate on September 14, 2024 and sell it today you would earn a total of  58.00  from holding Bridgemarq Real Estate or generate 5.87% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	90.63%
Values	Daily Returns

CoStar Group  vs.  Bridgemarq Real Estate

CoStar Group

Risk-Adjusted Performance

0 of 100

Weak

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

Bridgemarq Real Estate

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Bridgemarq Real Estate are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly abnormal basic indicators, Bridgemarq Real may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with CoStar and Bridgemarq Real

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

The idea behind CoStar Group and Bridgemarq Real Estate 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.