Correlation Between American Campus and Bluerock Residential
Can any of the company-specific risk be diversified away by investing in both American Campus and Bluerock Residential 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 American Campus and Bluerock Residential into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Campus Communities and Bluerock Residential Growth, you can compare the effects of market volatilities on American Campus and Bluerock Residential 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 American Campus with a short position of Bluerock Residential. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Campus and Bluerock Residential.
Diversification Opportunities for American Campus and Bluerock Residential
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between American and Bluerock is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding American Campus Communities and Bluerock Residential Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bluerock Residential and American Campus 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 American Campus Communities are associated (or correlated) with Bluerock Residential. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bluerock Residential has no effect on the direction of American Campus i.e., American Campus and Bluerock Residential go up and down completely randomly.
Pair Corralation between American Campus and Bluerock Residential
Considering the 90-day investment horizon American Campus Communities is expected to generate 0.28 times more return on investment than Bluerock Residential. However, American Campus Communities is 3.57 times less risky than Bluerock Residential. It trades about 0.05 of its potential returns per unit of risk. Bluerock Residential Growth is currently generating about 0.01 per unit of risk. If you would invest 6,493 in American Campus Communities on January 24, 2024 and sell it today you would earn a total of 49.00 from holding American Campus Communities or generate 0.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 62.96% |
| Values | Daily Returns |
American Campus Communities vs. Bluerock Residential Growth
Performance |
| Timeline |
| American Campus Comm |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Bluerock Residential |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
American Campus and Bluerock Residential Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Campus and Bluerock Residential
The main advantage of trading using opposite American Campus and Bluerock Residential positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Campus position performs unexpectedly, Bluerock Residential 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 Residential will offset losses from the drop in Bluerock Residential's long position.| American Campus vs. National Vision Holdings | American Campus vs. Vishay Intertechnology | American Campus vs. Coupang LLC | American Campus vs. Micron Technology |
| Bluerock Residential vs. Guangzhou Automobile Group | Bluerock Residential vs. Adient PLC | Bluerock Residential vs. Southwest Airlines | Bluerock Residential vs. Tesla Inc |
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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