Correlation Between Bluerock Homes and Newmark

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

Diversification Opportunities for Bluerock Homes and Newmark

-0.33

Correlation Coefficient

Bluerock Homes  Newmark

Very good diversification

The 3 months correlation between Bluerock and Newmark is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Bluerock Homes Trust and Newmark Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Newmark Group 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 Newmark. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Newmark Group has no effect on the direction of Bluerock Homes i.e., Bluerock Homes and Newmark go up and down completely randomly.

Pair Corralation between Bluerock Homes and Newmark

Considering the 90-day investment horizon Bluerock Homes Trust is expected to under-perform the Newmark. In addition to that, Bluerock Homes is 1.29 times more volatile than Newmark Group. It trades about -0.04 of its total potential returns per unit of risk. Newmark Group is currently generating about 0.11 per unit of volatility. If you would invest  1,376  in Newmark Group on September 2, 2024 and sell it today you would earn a total of  172.00  from holding Newmark Group or generate 12.5% 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.  Newmark Group

Bluerock Homes Trust

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bluerock Homes Trust has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical indicators, Bluerock Homes is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Newmark Group

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Newmark Group are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Newmark may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Bluerock Homes and Newmark

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

The idea behind Bluerock Homes Trust and Newmark Group 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 Global Correlations module to find global opportunities by holding instruments from different markets.