Correlation Between UNITED URBAN and SL Green

Can any of the company-specific risk be diversified away by investing in both UNITED URBAN and SL Green 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 UNITED URBAN and SL Green into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between UNITED URBAN INV and SL Green Realty, you can compare the effects of market volatilities on UNITED URBAN and SL Green 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 UNITED URBAN with a short position of SL Green. Check out your portfolio center. Please also check ongoing floating volatility patterns of UNITED URBAN and SL Green.

Diversification Opportunities for UNITED URBAN and SL Green

-0.58

Correlation Coefficient

UNITED URBAN  SL Green

Excellent diversification

The 3 months correlation between UNITED and GEI is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding UNITED URBAN INV and SL Green Realty in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SL Green Realty and UNITED URBAN 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 UNITED URBAN INV are associated (or correlated) with SL Green. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SL Green Realty has no effect on the direction of UNITED URBAN i.e., UNITED URBAN and SL Green go up and down completely randomly.

Pair Corralation between UNITED URBAN and SL Green

Assuming the 90 days horizon UNITED URBAN INV is expected to under-perform the SL Green. But the stock apears to be less risky and, when comparing its historical volatility, UNITED URBAN INV is 2.18 times less risky than SL Green. The stock trades about -0.05 of its potential returns per unit of risk. The SL Green Realty is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  5,686  in SL Green Realty on September 3, 2024 and sell it today you would earn a total of  1,646  from holding SL Green Realty or generate 28.95% return on investment over 90 days.

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

UNITED URBAN INV  vs.  SL Green Realty

UNITED URBAN INV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days UNITED URBAN INV has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, UNITED URBAN is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

SL Green Realty

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in SL Green Realty are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, SL Green reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with UNITED URBAN and SL Green

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

The idea behind UNITED URBAN INV and SL Green Realty 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.