Correlation Between Essential Properties and Urban Edge

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

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

Diversification Opportunities for Essential Properties and Urban Edge

0.04

Correlation Coefficient

Essential Properties  Urban Edge

Significant diversification

The 3 months correlation between Essential and Urban is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Essential Properties Realty 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 Essential Properties 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 Essential Properties Realty 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 Essential Properties i.e., Essential Properties and Urban Edge go up and down completely randomly.

Pair Corralation between Essential Properties and Urban Edge

Given the investment horizon of 90 days Essential Properties Realty is expected to under-perform the Urban Edge. In addition to that, Essential Properties is 1.01 times more volatile than Urban Edge Properties. It trades about -0.21 of its total potential returns per unit of risk. Urban Edge Properties is currently generating about -0.14 per unit of volatility. If you would invest  2,282  in Urban Edge Properties on September 21, 2024 and sell it today you would lose (95.00) from holding Urban Edge Properties or give up 4.16% of portfolio value over 90 days.

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

Essential Properties Realty  vs.  Urban Edge Properties

Essential Properties

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Essential Properties Realty has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Urban Edge Properties

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Urban Edge Properties are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Urban Edge is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Essential Properties and Urban Edge

The main advantage of trading using opposite Essential Properties and Urban Edge positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Essential Properties 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 Essential Properties Realty 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.