Correlation Between Nike and Bluerock Homes
Can any of the company-specific risk be diversified away by investing in both Nike 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 Nike and Bluerock Homes into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nike Inc and Bluerock Homes Trust, you can compare the effects of market volatilities on Nike 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 Nike with a short position of Bluerock Homes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nike and Bluerock Homes.
Diversification Opportunities for Nike and Bluerock Homes
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Nike and Bluerock is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Nike Inc 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 Nike 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 Nike Inc 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 Nike i.e., Nike and Bluerock Homes go up and down completely randomly.
Pair Corralation between Nike and Bluerock Homes
Considering the 90-day investment horizon Nike Inc is expected to generate 1.15 times more return on investment than Bluerock Homes. However, Nike is 1.15 times more volatile than Bluerock Homes Trust. It trades about -0.04 of its potential returns per unit of risk. Bluerock Homes Trust is currently generating about -0.06 per unit of risk. If you would invest 9,397 in Nike Inc on September 1, 2024 and sell it today you would lose (1,520) from holding Nike Inc or give up 16.18% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nike Inc vs. Bluerock Homes Trust
Performance |
| Timeline |
| Nike Inc |
| Bluerock Homes Trust |
Nike and Bluerock Homes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nike and Bluerock Homes
The main advantage of trading using opposite Nike and Bluerock Homes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nike 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 Nike Inc 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.| Bluerock Homes vs. Re Max Holding | Bluerock Homes vs. Marcus Millichap | Bluerock Homes vs. Frp Holdings Ord | Bluerock Homes vs. Maui Land Pineapple |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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