Correlation Between Belpointe PREP and CTO Realty

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

By analyzing existing cross correlation between Belpointe PREP LLC and CTO Realty Growth, you can compare the effects of market volatilities on Belpointe PREP and CTO 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 Belpointe PREP with a short position of CTO Realty. Check out your portfolio center. Please also check ongoing floating volatility patterns of Belpointe PREP and CTO Realty.

Diversification Opportunities for Belpointe PREP and CTO Realty

0.8

Correlation Coefficient

Belpointe PREP  CTO Realty

Very poor diversification

The 3 months correlation between Belpointe and CTO is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Belpointe PREP LLC and CTO Realty Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CTO Realty Growth and Belpointe PREP 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 Belpointe PREP LLC are associated (or correlated) with CTO Realty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CTO Realty Growth has no effect on the direction of Belpointe PREP i.e., Belpointe PREP and CTO Realty go up and down completely randomly.

Pair Corralation between Belpointe PREP and CTO Realty

Allowing for the 90-day total investment horizon Belpointe PREP LLC is expected to under-perform the CTO Realty. In addition to that, Belpointe PREP is 1.3 times more volatile than CTO Realty Growth. It trades about -0.01 of its total potential returns per unit of risk. CTO Realty Growth is currently generating about 0.03 per unit of volatility. If you would invest  1,578  in CTO Realty Growth on June 25, 2024 and sell it today you would earn a total of  318.00  from holding CTO Realty Growth or generate 20.15% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	99.8%
Values	Daily Returns

Belpointe PREP LLC  vs.  CTO Realty Growth

Belpointe PREP LLC

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Belpointe PREP LLC are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Belpointe PREP showed solid returns over the last few months and may actually be approaching a breakup point.

CTO Realty Growth

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CTO Realty Growth are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal basic indicators, CTO Realty displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Belpointe PREP and CTO Realty

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

The idea behind Belpointe PREP LLC and CTO Realty Growth 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.