Correlation Between Aeroports and UDR

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

By analyzing existing cross correlation between Aeroports de Paris and UDR Inc, you can compare the effects of market volatilities on Aeroports and UDR 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 Aeroports with a short position of UDR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aeroports and UDR.

Diversification Opportunities for Aeroports and UDR

0.27

Correlation Coefficient

Aeroports  UDR

Modest diversification

The 3 months correlation between Aeroports and UDR is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Aeroports de Paris and UDR Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UDR Inc and Aeroports 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 Aeroports de Paris are associated (or correlated) with UDR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UDR Inc has no effect on the direction of Aeroports i.e., Aeroports and UDR go up and down completely randomly.

Pair Corralation between Aeroports and UDR

Assuming the 90 days horizon Aeroports de Paris is expected to under-perform the UDR. But the pink sheet apears to be less risky and, when comparing its historical volatility, Aeroports de Paris is 1.61 times less risky than UDR. The pink sheet trades about -0.12 of its potential returns per unit of risk. The UDR Inc is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  4,449  in UDR Inc on September 2, 2024 and sell it today you would earn a total of  137.00  from holding UDR Inc or generate 3.08% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.46%
Values	Daily Returns

Aeroports de Paris  vs.  UDR Inc

Aeroports de Paris

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aeroports de Paris has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Aeroports is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

UDR Inc

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in UDR Inc are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable fundamental indicators, UDR is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Aeroports and UDR

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

The idea behind Aeroports de Paris and UDR Inc 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.

Check out your portfolio center.

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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.