Correlation Between Apartment Income and Urban Edge

Can any of the company-specific risk be diversified away by investing in both Apartment Income and Urban Edge 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 Apartment Income and Urban Edge into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Apartment Income REIT and Urban Edge Properties, you can compare the effects of market volatilities on Apartment Income and Urban Edge 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 Apartment Income with a short position of Urban Edge. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apartment Income and Urban Edge.

Diversification Opportunities for Apartment Income and Urban Edge

0.6

Correlation Coefficient

Apartment Income  Urban Edge

Poor diversification

The 3 months correlation between Apartment and Urban is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Apartment Income REIT and Urban Edge Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Urban Edge Properties and Apartment Income 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 Apartment Income REIT are associated (or correlated) with Urban Edge. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Urban Edge Properties has no effect on the direction of Apartment Income i.e., Apartment Income and Urban Edge go up and down completely randomly.

Pair Corralation between Apartment Income and Urban Edge

If you would invest  2,054  in Urban Edge Properties on September 4, 2024 and sell it today you would earn a total of  207.00  from holding Urban Edge Properties or generate 10.08% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	1.59%
Values	Daily Returns

Apartment Income REIT  vs.  Urban Edge Properties

Apartment Income REIT

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Apartment Income REIT has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Apartment Income is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Urban Edge Properties

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Urban Edge Properties are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Urban Edge may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Apartment Income and Urban Edge

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

The idea behind Apartment Income REIT and Urban Edge Properties 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 CEOs Directory module to screen CEOs from public companies around the world.