Correlation Between BRT Realty and Clipper Realty

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

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

Diversification Opportunities for BRT Realty and Clipper Realty

-0.64

Correlation Coefficient

BRT Realty  Clipper Realty

Excellent diversification

The 3 months correlation between BRT and Clipper is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding BRT Realty Trust and Clipper Realty in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clipper Realty and BRT Realty 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 BRT Realty Trust are associated (or correlated) with Clipper Realty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clipper Realty has no effect on the direction of BRT Realty i.e., BRT Realty and Clipper Realty go up and down completely randomly.

Pair Corralation between BRT Realty and Clipper Realty

Considering the 90-day investment horizon BRT Realty Trust is expected to generate 0.69 times more return on investment than Clipper Realty. However, BRT Realty Trust is 1.46 times less risky than Clipper Realty. It trades about 0.1 of its potential returns per unit of risk. Clipper Realty is currently generating about -0.1 per unit of risk. If you would invest  1,546  in BRT Realty Trust on March 14, 2024 and sell it today you would earn a total of  184.00  from holding BRT Realty Trust or generate 11.9% return on investment over 90 days.

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

BRT Realty Trust  vs.  Clipper Realty

BRT Realty Trust

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in BRT Realty Trust are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, BRT Realty may actually be approaching a critical reversion point that can send shares even higher in July 2024.

Clipper Realty

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Clipper Realty has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in July 2024. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with BRT Realty and Clipper Realty

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

The idea behind BRT Realty Trust and Clipper Realty 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.