Correlation Between Equity Lifestyle and Bluerock Homes

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

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

Diversification Opportunities for Equity Lifestyle and Bluerock Homes

-0.67

Correlation Coefficient

Equity Lifestyle  Bluerock Homes

Excellent diversification

The 3 months correlation between Equity and Bluerock is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Equity Lifestyle Properties 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 Equity Lifestyle 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 Equity Lifestyle Properties 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 Equity Lifestyle i.e., Equity Lifestyle and Bluerock Homes go up and down completely randomly.

Pair Corralation between Equity Lifestyle and Bluerock Homes

Considering the 90-day investment horizon Equity Lifestyle Properties is expected to under-perform the Bluerock Homes. But the stock apears to be less risky and, when comparing its historical volatility, Equity Lifestyle Properties is 1.62 times less risky than Bluerock Homes. The stock trades about -0.07 of its potential returns per unit of risk. The Bluerock Homes Trust is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  1,450  in Bluerock Homes Trust on March 5, 2024 and sell it today you would earn a total of  225.00  from holding Bluerock Homes Trust or generate 15.52% return on investment over 90 days.

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

Equity Lifestyle Properties  vs.  Bluerock Homes Trust

Equity Lifestyle Pro

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Equity Lifestyle Properties has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable essential indicators, Equity Lifestyle is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Bluerock Homes Trust

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Bluerock Homes Trust are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating technical indicators, Bluerock Homes displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Equity Lifestyle and Bluerock Homes

The main advantage of trading using opposite Equity Lifestyle and Bluerock Homes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Equity Lifestyle 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 Equity Lifestyle Properties 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.