Correlation Between American Homes and Bluerock Homes
Can any of the company-specific risk be diversified away by investing in both American Homes 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 American Homes and Bluerock Homes into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Homes 4 and Bluerock Homes Trust, you can compare the effects of market volatilities on American Homes 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 American Homes with a short position of Bluerock Homes. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Homes and Bluerock Homes.
Diversification Opportunities for American Homes and Bluerock Homes
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between American and Bluerock is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding American Homes 4 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 American 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 American Homes 4 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 American Homes i.e., American Homes and Bluerock Homes go up and down completely randomly.
Pair Corralation between American Homes and Bluerock Homes
Assuming the 90 days trading horizon American Homes 4 is expected to under-perform the Bluerock Homes. But the preferred stock apears to be less risky and, when comparing its historical volatility, American Homes 4 is 2.59 times less risky than Bluerock Homes. The preferred stock trades about -0.08 of its potential returns per unit of risk. The Bluerock Homes Trust is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 1,464 in Bluerock Homes Trust on February 28, 2024 and sell it today you would earn a total of 246.00 from holding Bluerock Homes Trust or generate 16.8% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 98.44% |
Values | Daily Returns |
American Homes 4 vs. Bluerock Homes Trust
Performance |
Timeline |
American Homes 4 |
Bluerock Homes Trust |
American Homes and Bluerock Homes Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with American Homes and Bluerock Homes
The main advantage of trading using opposite American Homes and Bluerock Homes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Homes 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.American Homes vs. Mid America Apartment Communities | American Homes vs. UMH Properties | American Homes vs. Investors Real Estate | American Homes vs. Clipper Realty |
Bluerock Homes vs. Independence Realty Trust | Bluerock Homes vs. Equity Residential | Bluerock Homes vs. Mid America Apartment Communities |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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