Correlation Between UMH Properties and Bluerock Homes

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

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

Diversification Opportunities for UMH Properties and Bluerock Homes

0.49

Correlation Coefficient

UMH Properties  Bluerock Homes

Very weak diversification

The 3 months correlation between UMH and Bluerock is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding UMH Properties 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 UMH Properties 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 UMH Properties 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 UMH Properties i.e., UMH Properties and Bluerock Homes go up and down completely randomly.

Pair Corralation between UMH Properties and Bluerock Homes

Assuming the 90 days trading horizon UMH Properties is expected to generate 0.41 times more return on investment than Bluerock Homes. However, UMH Properties is 2.43 times less risky than Bluerock Homes. It trades about 0.0 of its potential returns per unit of risk. Bluerock Homes Trust is currently generating about -0.14 per unit of risk. If you would invest  2,274  in UMH Properties on December 20, 2024 and sell it today you would earn a total of  0.00  from holding UMH Properties or generate 0.0% return on investment over 90 days.

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

UMH Properties  vs.  Bluerock Homes Trust

UMH Properties

Risk-Adjusted Performance

Very Weak

Over the last 90 days UMH Properties has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical indicators, UMH Properties is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Bluerock Homes Trust

Risk-Adjusted Performance

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 latest uncertain performance, the Stock's technical indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with UMH Properties and Bluerock Homes

The main advantage of trading using opposite UMH Properties and Bluerock Homes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UMH Properties 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 UMH Properties 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.