Correlation Between Cedar Realty and Urban Edge

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

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

Diversification Opportunities for Cedar Realty and Urban Edge

0.72

Correlation Coefficient

Cedar Realty  Urban Edge

Poor diversification

The 3 months correlation between Cedar and Urban is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Cedar Realty Trust 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 Cedar Realty 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 Cedar Realty Trust 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 Cedar Realty i.e., Cedar Realty and Urban Edge go up and down completely randomly.

Pair Corralation between Cedar Realty and Urban Edge

Assuming the 90 days trading horizon Cedar Realty Trust is expected to generate 2.57 times more return on investment than Urban Edge. However, Cedar Realty is 2.57 times more volatile than Urban Edge Properties. It trades about 0.11 of its potential returns per unit of risk. Urban Edge Properties is currently generating about 0.16 per unit of risk. If you would invest  1,367  in Cedar Realty Trust on September 5, 2024 and sell it today you would earn a total of  243.00  from holding Cedar Realty Trust or generate 17.78% return on investment over 90 days.

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

Cedar Realty Trust  vs.  Urban Edge Properties

Cedar Realty Trust

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Cedar Realty Trust are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Cedar Realty sustained solid returns over the last few months and may actually be approaching a breakup point.

Urban Edge Properties

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Urban Edge Properties are ranked lower than 12 (%) 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 Cedar Realty and Urban Edge

The main advantage of trading using opposite Cedar Realty and Urban Edge positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cedar Realty 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 Cedar Realty Trust 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.