Correlation Between Urban Edge and CBL Associates

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

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

Diversification Opportunities for Urban Edge and CBL Associates

0.81

Correlation Coefficient

Urban Edge  CBL Associates

Very poor diversification

The 3 months correlation between Urban and CBL is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Urban Edge Properties and CBL Associates Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CBL Associates Properties and Urban Edge 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 Urban Edge Properties are associated (or correlated) with CBL Associates. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CBL Associates Properties has no effect on the direction of Urban Edge i.e., Urban Edge and CBL Associates go up and down completely randomly.

Pair Corralation between Urban Edge and CBL Associates

Allowing for the 90-day total investment horizon Urban Edge is expected to generate 2.27 times less return on investment than CBL Associates. But when comparing it to its historical volatility, Urban Edge Properties is 1.26 times less risky than CBL Associates. It trades about 0.14 of its potential returns per unit of risk. CBL Associates Properties is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest  2,545  in CBL Associates Properties on September 3, 2024 and sell it today you would earn a total of  602.00  from holding CBL Associates Properties or generate 23.65% return on investment over 90 days.

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

Urban Edge Properties  vs.  CBL Associates Properties

Urban Edge Properties

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Urban Edge Properties are ranked lower than 11 (%) 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.

CBL Associates Properties

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in CBL Associates Properties are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Despite quite fragile fundamental drivers, CBL Associates disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Urban Edge and CBL Associates

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

The idea behind Urban Edge Properties and CBL Associates 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.

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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.