Correlation Between Belpointe PREP and Real Estate

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

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

Diversification Opportunities for Belpointe PREP and Real Estate

-0.54

Correlation Coefficient

Belpointe PREP  Real Estate

Excellent diversification

The 3 months correlation between Belpointe and Real is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Belpointe PREP LLC and Real Estate Securities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Real Estate Securities and Belpointe PREP 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 Belpointe PREP LLC are associated (or correlated) with Real Estate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Real Estate Securities has no effect on the direction of Belpointe PREP i.e., Belpointe PREP and Real Estate go up and down completely randomly.

Pair Corralation between Belpointe PREP and Real Estate

Allowing for the 90-day total investment horizon Belpointe PREP LLC is expected to generate 2.17 times more return on investment than Real Estate. However, Belpointe PREP is 2.17 times more volatile than Real Estate Securities. It trades about 0.09 of its potential returns per unit of risk. Real Estate Securities is currently generating about -0.07 per unit of risk. If you would invest  7,068  in Belpointe PREP LLC on September 21, 2024 and sell it today you would earn a total of  725.00  from holding Belpointe PREP LLC or generate 10.26% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	74.6%
Values	Daily Returns

Belpointe PREP LLC  vs.  Real Estate Securities

Belpointe PREP LLC

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Belpointe PREP LLC are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Belpointe PREP may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Real Estate Securities

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Real Estate Securities has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, Real Estate is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Belpointe PREP and Real Estate

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

The idea behind Belpointe PREP LLC and Real Estate Securities 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.