Correlation Between Bluerock Homes and MOLSON

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

Diversification Opportunities for Bluerock Homes and MOLSON

-0.04

Correlation Coefficient

Bluerock Homes  MOLSON

Good diversification

The 3 months correlation between Bluerock and MOLSON is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Bluerock Homes Trust and MOLSON RS BREWING in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MOLSON RS BREWING 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 MOLSON. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MOLSON RS BREWING has no effect on the direction of Bluerock Homes i.e., Bluerock Homes and MOLSON go up and down completely randomly.

Pair Corralation between Bluerock Homes and MOLSON

Considering the 90-day investment horizon Bluerock Homes is expected to generate 2.53 times less return on investment than MOLSON. In addition to that, Bluerock Homes is 1.15 times more volatile than MOLSON RS BREWING. It trades about 0.04 of its total potential returns per unit of risk. MOLSON RS BREWING is currently generating about 0.12 per unit of volatility. If you would invest  8,192  in MOLSON RS BREWING on September 5, 2024 and sell it today you would earn a total of  265.00  from holding MOLSON RS BREWING or generate 3.23% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	90.91%
Values	Daily Returns

Bluerock Homes Trust  vs.  MOLSON RS BREWING

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.

MOLSON RS BREWING

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MOLSON RS BREWING has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, MOLSON is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Bluerock Homes and MOLSON

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

The idea behind Bluerock Homes Trust and MOLSON RS BREWING 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.