Correlation Between COPT Defense and Brixmor Property

Can any of the company-specific risk be diversified away by investing in both COPT Defense and Brixmor 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 COPT Defense and Brixmor Property into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between COPT Defense Properties and Brixmor Property, you can compare the effects of market volatilities on COPT Defense and Brixmor 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 COPT Defense with a short position of Brixmor Property. Check out your portfolio center. Please also check ongoing floating volatility patterns of COPT Defense and Brixmor Property.

Diversification Opportunities for COPT Defense and Brixmor Property

0.74

Correlation Coefficient

COPT Defense  Brixmor Property

Poor diversification

The 3 months correlation between COPT and Brixmor is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding COPT Defense Properties and Brixmor Property in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brixmor Property and COPT Defense 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 COPT Defense Properties are associated (or correlated) with Brixmor Property. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brixmor Property has no effect on the direction of COPT Defense i.e., COPT Defense and Brixmor Property go up and down completely randomly.

Pair Corralation between COPT Defense and Brixmor Property

Considering the 90-day investment horizon COPT Defense is expected to generate 1.78 times less return on investment than Brixmor Property. But when comparing it to its historical volatility, COPT Defense Properties is 1.34 times less risky than Brixmor Property. It trades about 0.18 of its potential returns per unit of risk. Brixmor Property is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest  2,691  in Brixmor Property on August 12, 2024 and sell it today you would earn a total of  183.00  from holding Brixmor Property or generate 6.8% return on investment over 90 days.

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

COPT Defense Properties  vs.  Brixmor Property

COPT Defense Properties

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in COPT Defense Properties are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating fundamental indicators, COPT Defense reported solid returns over the last few months and may actually be approaching a breakup point.

Brixmor Property

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Brixmor Property are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, Brixmor Property showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with COPT Defense and Brixmor Property

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

The idea behind COPT Defense Properties and Brixmor Property 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.