Correlation Between Apartment Income and UMH Properties

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

Diversification Opportunities for Apartment Income and UMH Properties

-0.17

Correlation Coefficient

Apartment Income  UMH Properties

Good diversification

The 3 months correlation between Apartment and UMH is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Apartment Income REIT and UMH Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UMH 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 UMH Properties. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UMH Properties has no effect on the direction of Apartment Income i.e., Apartment Income and UMH Properties go up and down completely randomly.

Pair Corralation between Apartment Income and UMH Properties

Given the investment horizon of 90 days Apartment Income is expected to generate 1.19 times less return on investment than UMH Properties. In addition to that, Apartment Income is 1.15 times more volatile than UMH Properties. It trades about 0.03 of its total potential returns per unit of risk. UMH Properties is currently generating about 0.04 per unit of volatility. If you would invest  1,536  in UMH Properties on September 2, 2024 and sell it today you would earn a total of  384.00  from holding UMH Properties or generate 25.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	78.23%
Values	Daily Returns

Apartment Income REIT  vs.  UMH 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 latest stock price tumult, may contribute to shorter-term losses for the shareholders.

UMH Properties

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in UMH Properties are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong primary indicators, UMH Properties is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Apartment Income and UMH Properties

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

The idea behind Apartment Income REIT and UMH 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.