Correlation Between Belpointe PREP and MDJM

Can any of the company-specific risk be diversified away by investing in both Belpointe PREP and MDJM 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 MDJM 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 MDJM, you can compare the effects of market volatilities on Belpointe PREP and MDJM 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 MDJM. Check out your portfolio center. Please also check ongoing floating volatility patterns of Belpointe PREP and MDJM.

Diversification Opportunities for Belpointe PREP and MDJM

-0.59

Correlation Coefficient

Belpointe PREP  MDJM

Excellent diversification

The 3 months correlation between Belpointe and MDJM is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Belpointe PREP LLC and MDJM in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MDJM 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 MDJM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MDJM has no effect on the direction of Belpointe PREP i.e., Belpointe PREP and MDJM go up and down completely randomly.

Pair Corralation between Belpointe PREP and MDJM

Allowing for the 90-day total investment horizon Belpointe PREP LLC is expected to under-perform the MDJM. But the stock apears to be less risky and, when comparing its historical volatility, Belpointe PREP LLC is 3.76 times less risky than MDJM. The stock trades about -0.3 of its potential returns per unit of risk. The MDJM is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  23.00  in MDJM on October 12, 2024 and sell it today you would lose (3.00) from holding MDJM or give up 13.04% of portfolio value over 90 days.

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

Belpointe PREP LLC  vs.  MDJM

Belpointe PREP LLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Belpointe PREP LLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Belpointe PREP is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

MDJM

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MDJM has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's forward-looking signals remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Belpointe PREP and MDJM

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

The idea behind Belpointe PREP LLC and MDJM 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.