Correlation Between Broadmark Realty and Starwood Property
Can any of the company-specific risk be diversified away by investing in both Broadmark Realty and Starwood Property 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 Broadmark Realty and Starwood Property into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Broadmark Realty Capital and Starwood Property Trust, you can compare the effects of market volatilities on Broadmark Realty and Starwood Property 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 Broadmark Realty with a short position of Starwood Property. Check out your portfolio center. Please also check ongoing floating volatility patterns of Broadmark Realty and Starwood Property.
Diversification Opportunities for Broadmark Realty and Starwood Property
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Broadmark and Starwood is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Broadmark Realty Capital and Starwood Property Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Starwood Property Trust and Broadmark Realty 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 Broadmark Realty Capital are associated (or correlated) with Starwood Property. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Starwood Property Trust has no effect on the direction of Broadmark Realty i.e., Broadmark Realty and Starwood Property go up and down completely randomly.
Pair Corralation between Broadmark Realty and Starwood Property
If you would invest 1,794 in Starwood Property Trust on August 24, 2024 and sell it today you would earn a total of 197.00 from holding Starwood Property Trust or generate 10.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 0.8% |
| Values | Daily Returns |
Broadmark Realty Capital vs. Starwood Property Trust
Performance |
| Timeline |
| Broadmark Realty Capital |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Starwood Property Trust |
Broadmark Realty and Starwood Property Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Broadmark Realty and Starwood Property
The main advantage of trading using opposite Broadmark Realty and Starwood Property positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Broadmark Realty position performs unexpectedly, Starwood Property 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 Starwood Property will offset losses from the drop in Starwood Property's long position.| Broadmark Realty vs. Two Harbors Investments | Broadmark Realty vs. Ares Commercial Real | Broadmark Realty vs. Apollo Commercial Real | Broadmark Realty vs. Ellington Financial |
| Starwood Property vs. Blackstone Mortgage Trust | Starwood Property vs. Arbor Realty Trust | Starwood Property vs. Apollo Commercial Real | Starwood Property vs. Omega Healthcare Investors |
Check out your portfolio center.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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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