Correlation Between Centerspace and BRT Realty
Can any of the company-specific risk be diversified away by investing in both Centerspace and BRT Realty 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 Centerspace and BRT Realty into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Centerspace and BRT Realty Trust, you can compare the effects of market volatilities on Centerspace and BRT Realty 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 Centerspace with a short position of BRT Realty. Check out your portfolio center. Please also check ongoing floating volatility patterns of Centerspace and BRT Realty.
Diversification Opportunities for Centerspace and BRT Realty
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Centerspace and BRT is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Centerspace and BRT Realty Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BRT Realty Trust and Centerspace 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 Centerspace are associated (or correlated) with BRT Realty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BRT Realty Trust has no effect on the direction of Centerspace i.e., Centerspace and BRT Realty go up and down completely randomly.
Pair Corralation between Centerspace and BRT Realty
Considering the 90-day investment horizon Centerspace is expected to generate 5.75 times less return on investment than BRT Realty. But when comparing it to its historical volatility, Centerspace is 1.22 times less risky than BRT Realty. It trades about 0.07 of its potential returns per unit of risk. BRT Realty Trust is currently generating about 0.35 of returns per unit of risk over similar time horizon. If you would invest 1,668 in BRT Realty Trust on August 29, 2024 and sell it today you would earn a total of 314.00 from holding BRT Realty Trust or generate 18.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Centerspace vs. BRT Realty Trust
Performance |
| Timeline |
| Centerspace |
| BRT Realty Trust |
Centerspace and BRT Realty Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Centerspace and BRT Realty
The main advantage of trading using opposite Centerspace and BRT Realty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Centerspace position performs unexpectedly, BRT Realty 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 BRT Realty will offset losses from the drop in BRT Realty's long position.| Centerspace vs. BRT Realty Trust | Centerspace vs. Nexpoint Residential Trust | Centerspace vs. Veris Residential | Centerspace vs. Clipper Realty |
| BRT Realty vs. Nexpoint Residential Trust | BRT Realty vs. Centerspace | BRT Realty vs. Veris Residential | BRT Realty vs. Apartment Investment and |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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