Correlation Between Centerspace and BRT Realty

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

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

Diversification Opportunities for Centerspace and BRT Realty

0.59

Correlation Coefficient

Centerspace  BRT Realty

Very weak diversification

The 3 months correlation between Centerspace and BRT is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Centerspace 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 Centerspace 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 Centerspace 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 Centerspace i.e., Centerspace and BRT Realty go up and down completely randomly.

Pair Corralation between Centerspace and BRT Realty

Considering the 90-day investment horizon Centerspace is expected to under-perform the BRT Realty. But the stock apears to be less risky and, when comparing its historical volatility, Centerspace is 1.19 times less risky than BRT Realty. The stock trades about -0.01 of its potential returns per unit of risk. The BRT Realty Trust is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  1,756  in BRT Realty Trust on December 29, 2024 and sell it today you would lose (15.00) from holding BRT Realty Trust or give up 0.85% of portfolio value over 90 days.

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

Centerspace  vs.  BRT Realty Trust

Centerspace

Risk-Adjusted Performance

Very Weak

Over the last 90 days Centerspace has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Centerspace 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

Very Weak

Over the last 90 days BRT Realty Trust has generated negative risk-adjusted returns adding no value to investors with long positions. 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 Centerspace and BRT Realty

The main advantage of trading using opposite Centerspace and BRT Realty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Centerspace 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 Centerspace 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.