Correlation Between BSR Real and Morguard North

Can any of the company-specific risk be diversified away by investing in both BSR Real and Morguard North 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 BSR Real and Morguard North into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between BSR Real Estate and Morguard North American, you can compare the effects of market volatilities on BSR Real and Morguard North 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 BSR Real with a short position of Morguard North. Check out your portfolio center. Please also check ongoing floating volatility patterns of BSR Real and Morguard North.

Diversification Opportunities for BSR Real and Morguard North

0.74

Correlation Coefficient

BSR Real  Morguard North

Poor diversification

The 3 months correlation between BSR and Morguard is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding BSR Real Estate and Morguard North American in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Morguard North American and BSR Real 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 BSR Real Estate are associated (or correlated) with Morguard North. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Morguard North American has no effect on the direction of BSR Real i.e., BSR Real and Morguard North go up and down completely randomly.

Pair Corralation between BSR Real and Morguard North

Assuming the 90 days trading horizon BSR Real Estate is expected to generate 0.77 times more return on investment than Morguard North. However, BSR Real Estate is 1.3 times less risky than Morguard North. It trades about -0.05 of its potential returns per unit of risk. Morguard North American is currently generating about -0.07 per unit of risk. If you would invest  1,909  in BSR Real Estate on September 13, 2024 and sell it today you would lose (69.00) from holding BSR Real Estate or give up 3.61% of portfolio value over 90 days.

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

BSR Real Estate  vs.  Morguard North American

BSR Real Estate

Risk-Adjusted Performance

0 of 100

Very Weak

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

Morguard North American

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with BSR Real and Morguard North

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

The idea behind BSR Real Estate and Morguard North American 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.