Correlation Between Global Medical and Bluerock Homes

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

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

Diversification Opportunities for Global Medical and Bluerock Homes

0.58

Correlation Coefficient

Global Medical  Bluerock Homes

Very weak diversification

The 3 months correlation between Global and Bluerock is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Global Medical REIT 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 Global Medical 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 Global Medical REIT 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 Global Medical i.e., Global Medical and Bluerock Homes go up and down completely randomly.

Pair Corralation between Global Medical and Bluerock Homes

Given the investment horizon of 90 days Global Medical REIT is expected to under-perform the Bluerock Homes. But the stock apears to be less risky and, when comparing its historical volatility, Global Medical REIT is 1.16 times less risky than Bluerock Homes. The stock trades about -0.27 of its potential returns per unit of risk. The Bluerock Homes Trust is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest  1,396  in Bluerock Homes Trust on September 23, 2024 and sell it today you would lose (29.00) from holding Bluerock Homes Trust or give up 2.08% of portfolio value over 90 days.

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

Global Medical REIT  vs.  Bluerock Homes Trust

Global Medical REIT

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Global Medical REIT has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

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 latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Global Medical and Bluerock Homes

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

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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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .