Correlation Between Weyerhaeuser and Urban Edge

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

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

Diversification Opportunities for Weyerhaeuser and Urban Edge

-0.49

Correlation Coefficient

Weyerhaeuser  Urban Edge

Very good diversification

The 3 months correlation between Weyerhaeuser and Urban is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Weyerhaeuser 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 Weyerhaeuser 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 Weyerhaeuser 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 Weyerhaeuser i.e., Weyerhaeuser and Urban Edge go up and down completely randomly.

Pair Corralation between Weyerhaeuser and Urban Edge

Allowing for the 90-day total investment horizon Weyerhaeuser is expected to under-perform the Urban Edge. In addition to that, Weyerhaeuser is 1.28 times more volatile than Urban Edge Properties. It trades about -0.19 of its total potential returns per unit of risk. Urban Edge Properties is currently generating about 0.03 per unit of volatility. If you would invest  2,114  in Urban Edge Properties on September 21, 2024 and sell it today you would earn a total of  43.00  from holding Urban Edge Properties or generate 2.03% return on investment over 90 days.

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

Weyerhaeuser  vs.  Urban Edge Properties

Weyerhaeuser

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Weyerhaeuser has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company 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 Weyerhaeuser and Urban Edge

The main advantage of trading using opposite Weyerhaeuser and Urban Edge positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Weyerhaeuser 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 Weyerhaeuser 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.