Correlation Between Urban Edge and Essential Properties

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

Diversification Opportunities for Urban Edge and Essential Properties

-0.09

Correlation Coefficient

Urban Edge  Essential Properties

Good diversification

The 3 months correlation between Urban and Essential is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Urban Edge Properties and Essential Properties Realty in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Essential 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 Essential Properties. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Essential Properties has no effect on the direction of Urban Edge i.e., Urban Edge and Essential Properties go up and down completely randomly.

Pair Corralation between Urban Edge and Essential Properties

Allowing for the 90-day total investment horizon Urban Edge Properties is expected to generate 1.02 times more return on investment than Essential Properties. However, Urban Edge is 1.02 times more volatile than Essential Properties Realty. It trades about 0.02 of its potential returns per unit of risk. Essential Properties Realty is currently generating about -0.05 per unit of risk. If you would invest  2,113  in Urban Edge Properties on September 19, 2024 and sell it today you would earn a total of  26.00  from holding Urban Edge Properties or generate 1.23% return on investment over 90 days.

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

Urban Edge Properties  vs.  Essential Properties Realty

Urban Edge Properties

Risk-Adjusted Performance

1 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Urban Edge Properties are ranked lower than 1 (%) 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 newest stock price tumult, may contribute to shorter-term losses for the shareholders.

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 comparatively stable basic indicators, Essential Properties is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Urban Edge and Essential Properties

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

The idea behind Urban Edge Properties and Essential Properties Realty 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.