Correlation Between Douglas Elliman and Bluerock Homes

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

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

Diversification Opportunities for Douglas Elliman and Bluerock Homes

-0.75

Correlation Coefficient

Douglas Elliman  Bluerock Homes

Pay attention - limited upside

The 3 months correlation between Douglas and Bluerock is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Douglas Elliman 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 Douglas Elliman 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 Douglas Elliman 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 Douglas Elliman i.e., Douglas Elliman and Bluerock Homes go up and down completely randomly.

Pair Corralation between Douglas Elliman and Bluerock Homes

Given the investment horizon of 90 days Douglas Elliman is expected to under-perform the Bluerock Homes. In addition to that, Douglas Elliman is 5.03 times more volatile than Bluerock Homes Trust. It trades about -0.16 of its total potential returns per unit of risk. Bluerock Homes Trust is currently generating about 0.07 per unit of volatility. If you would invest  1,679  in Bluerock Homes Trust on March 8, 2024 and sell it today you would earn a total of  29.00  from holding Bluerock Homes Trust or generate 1.73% return on investment over 90 days.

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

Douglas Elliman  vs.  Bluerock Homes Trust

Douglas Elliman

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Douglas Elliman has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in July 2024. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Bluerock Homes Trust

Risk-Adjusted Performance

9 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Bluerock Homes Trust are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very weak technical indicators, Bluerock Homes displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Douglas Elliman and Bluerock Homes

The main advantage of trading using opposite Douglas Elliman and Bluerock Homes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Douglas Elliman 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 Douglas Elliman 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.