Correlation Between Auckland International and UDR

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

By analyzing existing cross correlation between Auckland International Airport and UDR Inc, you can compare the effects of market volatilities on Auckland International and UDR 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 Auckland International with a short position of UDR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Auckland International and UDR.

Diversification Opportunities for Auckland International and UDR

-0.39

Correlation Coefficient

Auckland International  UDR

Very good diversification

The 3 months correlation between Auckland and UDR is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Auckland International Airport and UDR Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UDR Inc and Auckland International 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 Auckland International Airport are associated (or correlated) with UDR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UDR Inc has no effect on the direction of Auckland International i.e., Auckland International and UDR go up and down completely randomly.

Pair Corralation between Auckland International and UDR

Assuming the 90 days horizon Auckland International Airport is expected to generate 1.92 times more return on investment than UDR. However, Auckland International is 1.92 times more volatile than UDR Inc. It trades about 0.04 of its potential returns per unit of risk. UDR Inc is currently generating about 0.06 per unit of risk. If you would invest  2,183  in Auckland International Airport on December 28, 2024 and sell it today you would earn a total of  99.00  from holding Auckland International Airport or generate 4.54% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

Auckland International Airport  vs.  UDR Inc

Auckland International

Risk-Adjusted Performance

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Auckland International Airport are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile basic indicators, Auckland International may actually be approaching a critical reversion point that can send shares even higher in April 2025.

UDR Inc

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in UDR Inc are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable fundamental indicators, UDR is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Auckland International and UDR

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

The idea behind Auckland International Airport and UDR Inc 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.