Correlation Between BRT Realty and Alexandria Real

Can any of the company-specific risk be diversified away by investing in both BRT Realty and Alexandria Real 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 BRT Realty and Alexandria Real into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between BRT Realty Trust and Alexandria Real Estate, you can compare the effects of market volatilities on BRT Realty and Alexandria Real 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 BRT Realty with a short position of Alexandria Real. Check out your portfolio center. Please also check ongoing floating volatility patterns of BRT Realty and Alexandria Real.

Diversification Opportunities for BRT Realty and Alexandria Real

-0.46

Correlation Coefficient

BRT Realty  Alexandria Real

Very good diversification

The 3 months correlation between BRT and Alexandria is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding BRT Realty Trust and Alexandria Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alexandria Real Estate and BRT 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 BRT Realty Trust are associated (or correlated) with Alexandria Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alexandria Real Estate has no effect on the direction of BRT Realty i.e., BRT Realty and Alexandria Real go up and down completely randomly.

Pair Corralation between BRT Realty and Alexandria Real

Considering the 90-day investment horizon BRT Realty Trust is expected to under-perform the Alexandria Real. In addition to that, BRT Realty is 1.06 times more volatile than Alexandria Real Estate. It trades about -0.4 of its total potential returns per unit of risk. Alexandria Real Estate is currently generating about -0.38 per unit of volatility. If you would invest  11,204  in Alexandria Real Estate on September 24, 2024 and sell it today you would lose (1,313) from holding Alexandria Real Estate or give up 11.72% of portfolio value over 90 days.

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

BRT Realty Trust  vs.  Alexandria Real Estate

BRT Realty Trust

Risk-Adjusted Performance

0 of 100

Very Weak

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

Alexandria Real Estate

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Alexandria Real Estate has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with BRT Realty and Alexandria Real

The main advantage of trading using opposite BRT Realty and Alexandria Real positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BRT Realty position performs unexpectedly, Alexandria Real 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 Alexandria Real will offset losses from the drop in Alexandria Real's long position.

The idea behind BRT Realty Trust and Alexandria Real Estate 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.