Correlation Between BRT Realty and Sun Communities

Can any of the company-specific risk be diversified away by investing in both BRT Realty and Sun Communities 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 Sun Communities 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 Sun Communities, you can compare the effects of market volatilities on BRT Realty and Sun Communities 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 Sun Communities. Check out your portfolio center. Please also check ongoing floating volatility patterns of BRT Realty and Sun Communities.

Diversification Opportunities for BRT Realty and Sun Communities

0.31

Correlation Coefficient

BRT Realty  Sun Communities

Weak diversification

The 3 months correlation between BRT and Sun is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding BRT Realty Trust and Sun Communities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sun Communities 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 Sun Communities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sun Communities has no effect on the direction of BRT Realty i.e., BRT Realty and Sun Communities go up and down completely randomly.

Pair Corralation between BRT Realty and Sun Communities

Considering the 90-day investment horizon BRT Realty Trust is expected to under-perform the Sun Communities. But the stock apears to be less risky and, when comparing its historical volatility, BRT Realty Trust is 1.04 times less risky than Sun Communities. The stock trades about -0.05 of its potential returns per unit of risk. The Sun Communities is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  12,186  in Sun Communities on January 4, 2025 and sell it today you would earn a total of  821.00  from holding Sun Communities or generate 6.74% return on investment over 90 days.

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

BRT Realty Trust  vs.  Sun Communities

BRT Realty Trust

Risk-Adjusted Performance

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.

Sun Communities

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Sun Communities are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak basic indicators, Sun Communities may actually be approaching a critical reversion point that can send shares even higher in May 2025.

Pair Trading with BRT Realty and Sun Communities

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

The idea behind BRT Realty Trust and Sun Communities 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.