Correlation Between UMH Properties and Apartment Income

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

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

Diversification Opportunities for UMH Properties and Apartment Income

-0.17

Correlation Coefficient

UMH Properties  Apartment Income

Good diversification

The 3 months correlation between UMH and Apartment is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding UMH Properties and Apartment Income REIT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apartment Income REIT and UMH 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 UMH Properties are associated (or correlated) with Apartment Income. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apartment Income REIT has no effect on the direction of UMH Properties i.e., UMH Properties and Apartment Income go up and down completely randomly.

Pair Corralation between UMH Properties and Apartment Income

Considering the 90-day investment horizon UMH Properties is expected to generate 13.41 times more return on investment than Apartment Income. However, UMH Properties is 13.41 times more volatile than Apartment Income REIT. It trades about 0.17 of its potential returns per unit of risk. Apartment Income REIT is currently generating about 0.64 per unit of risk. If you would invest  1,485  in UMH Properties on September 3, 2024 and sell it today you would earn a total of  411.00  from holding UMH Properties or generate 27.68% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	13.6%
Values	Daily Returns

UMH Properties  vs.  Apartment Income REIT

UMH Properties

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in UMH Properties are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong primary indicators, UMH Properties is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Apartment Income REIT

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Apartment Income REIT has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Apartment Income is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with UMH Properties and Apartment Income

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

The idea behind UMH Properties and Apartment Income REIT 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.