Correlation Between Universal Health and Bluerock Homes

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

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

Diversification Opportunities for Universal Health and Bluerock Homes

0.36

Correlation Coefficient

Universal Health  Bluerock Homes

Weak diversification

The 3 months correlation between Universal and Bluerock is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Universal Health Realty and Bluerock Homes Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bluerock Homes Trust and Universal Health 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 Universal Health Realty are associated (or correlated) with Bluerock Homes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bluerock Homes Trust has no effect on the direction of Universal Health i.e., Universal Health and Bluerock Homes go up and down completely randomly.

Pair Corralation between Universal Health and Bluerock Homes

Considering the 90-day investment horizon Universal Health Realty is expected to under-perform the Bluerock Homes. In addition to that, Universal Health is 1.04 times more volatile than Bluerock Homes Trust. It trades about -0.21 of its total potential returns per unit of risk. Bluerock Homes Trust is currently generating about -0.06 per unit of volatility. If you would invest  1,396  in Bluerock Homes Trust on September 23, 2024 and sell it today you would lose (29.00) from holding Bluerock Homes Trust or give up 2.08% of portfolio value over 90 days.

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

Universal Health Realty  vs.  Bluerock Homes Trust

Universal Health Realty

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Universal Health Realty has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's technical indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Bluerock Homes Trust

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bluerock Homes Trust has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical indicators, Bluerock Homes is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Universal Health and Bluerock Homes

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

The idea behind Universal Health Realty and Bluerock Homes 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.