Correlation Between Apartment Investment and UMH Properties

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

Diversification Opportunities for Apartment Investment and UMH Properties

0.65

Correlation Coefficient

Apartment Investment  UMH Properties

Poor diversification

The 3 months correlation between Apartment and UMH is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Apartment Investment and and UMH Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UMH Properties and Apartment Investment 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 Investment and 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 Investment i.e., Apartment Investment and UMH Properties go up and down completely randomly.

Pair Corralation between Apartment Investment and UMH Properties

Considering the 90-day investment horizon Apartment Investment and is expected to under-perform the UMH Properties. But the stock apears to be less risky and, when comparing its historical volatility, Apartment Investment and is 1.18 times less risky than UMH Properties. The stock trades about -0.04 of its potential returns per unit of risk. The UMH Properties is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  1,978  in UMH Properties on September 12, 2024 and sell it today you would lose (38.00) from holding UMH Properties or give up 1.92% of portfolio value over 90 days.

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

Apartment Investment and  vs.  UMH Properties

Apartment Investment and

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Apartment Investment and has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable forward indicators, Apartment Investment is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

UMH Properties

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days UMH Properties has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong primary indicators, UMH Properties is not utilizing all of its potentials. The newest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Apartment Investment and UMH Properties

The main advantage of trading using opposite Apartment Investment and UMH Properties positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apartment Investment 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 Investment and 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.