Correlation Between Bluerock Homes and CBL Associates

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

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

Diversification Opportunities for Bluerock Homes and CBL Associates

-0.75

Correlation Coefficient

Bluerock Homes  CBL Associates

Pay attention - limited upside

The 3 months correlation between Bluerock and CBL is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Bluerock Homes Trust and CBL Associates Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CBL Associates Properties and Bluerock Homes 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 Bluerock Homes Trust are associated (or correlated) with CBL Associates. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CBL Associates Properties has no effect on the direction of Bluerock Homes i.e., Bluerock Homes and CBL Associates go up and down completely randomly.

Pair Corralation between Bluerock Homes and CBL Associates

Considering the 90-day investment horizon Bluerock Homes Trust is expected to generate 1.71 times more return on investment than CBL Associates. However, Bluerock Homes is 1.71 times more volatile than CBL Associates Properties. It trades about 0.16 of its potential returns per unit of risk. CBL Associates Properties is currently generating about -0.06 per unit of risk. If you would invest  1,480  in Bluerock Homes Trust on January 31, 2024 and sell it today you would earn a total of  203.00  from holding Bluerock Homes Trust or generate 13.72% return on investment over 90 days.

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

Bluerock Homes Trust  vs.  CBL Associates Properties

Bluerock Homes Trust

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Bluerock Homes Trust are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very weak technical indicators, Bluerock Homes displayed solid returns over the last few months and may actually be approaching a breakup point.

CBL Associates Properties

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CBL Associates Properties has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent fundamental drivers, CBL Associates is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Bluerock Homes and CBL Associates

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

The idea behind Bluerock Homes Trust and CBL Associates Properties 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.