Correlation Between Investcorp Credit and Bluerock Homes

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

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

Diversification Opportunities for Investcorp Credit and Bluerock Homes

-0.02

Correlation Coefficient

Investcorp Credit  Bluerock Homes

Good diversification

The 3 months correlation between Investcorp and Bluerock is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Investcorp Credit Management 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 Investcorp Credit 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 Investcorp Credit Management 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 Investcorp Credit i.e., Investcorp Credit and Bluerock Homes go up and down completely randomly.

Pair Corralation between Investcorp Credit and Bluerock Homes

Given the investment horizon of 90 days Investcorp Credit Management is expected to under-perform the Bluerock Homes. But the stock apears to be less risky and, when comparing its historical volatility, Investcorp Credit Management is 1.46 times less risky than Bluerock Homes. The stock trades about -0.03 of its potential returns per unit of risk. The Bluerock Homes Trust is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  1,659  in Bluerock Homes Trust on February 20, 2024 and sell it today you would earn a total of  91.00  from holding Bluerock Homes Trust or generate 5.49% return on investment over 90 days.

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

Investcorp Credit Management  vs.  Bluerock Homes Trust

Investcorp Credit

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Investcorp Credit Management are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong primary indicators, Investcorp Credit is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Bluerock Homes Trust

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Bluerock Homes Trust are ranked lower than 15 (%) 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.

Pair Trading with Investcorp Credit and Bluerock Homes

The main advantage of trading using opposite Investcorp Credit and Bluerock Homes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Investcorp Credit 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 Investcorp Credit Management 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.

Check out your portfolio center.

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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.