Correlation Between Bluerock Homes and SEI Investments

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

Diversification Opportunities for Bluerock Homes and SEI Investments

-0.29

Correlation Coefficient

Bluerock Homes  SEI Investments

Very good diversification

The 3 months correlation between Bluerock and SEI is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Bluerock Homes Trust and SEI Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SEI Investments 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 SEI Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SEI Investments has no effect on the direction of Bluerock Homes i.e., Bluerock Homes and SEI Investments go up and down completely randomly.

Pair Corralation between Bluerock Homes and SEI Investments

Considering the 90-day investment horizon Bluerock Homes Trust is expected to generate 1.68 times more return on investment than SEI Investments. However, Bluerock Homes is 1.68 times more volatile than SEI Investments. It trades about 0.13 of its potential returns per unit of risk. SEI Investments is currently generating about -0.19 per unit of risk. If you would invest  1,635  in Bluerock Homes Trust on March 12, 2024 and sell it today you would earn a total of  113.00  from holding Bluerock Homes Trust or generate 6.91% return on investment over 90 days.

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

Bluerock Homes Trust  vs.  SEI Investments

Bluerock Homes Trust

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Bluerock Homes Trust are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain technical indicators, Bluerock Homes displayed solid returns over the last few months and may actually be approaching a breakup point.

SEI Investments

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SEI Investments has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's forward indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Bluerock Homes and SEI Investments

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

The idea behind Bluerock Homes Trust and SEI Investments 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.