Correlation Between Healthcare Realty and Urban Edge

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

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

Diversification Opportunities for Healthcare Realty and Urban Edge

0.83

Correlation Coefficient

Healthcare Realty  Urban Edge

Very poor diversification

The 3 months correlation between Healthcare and Urban is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Healthcare Realty Trust 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 Healthcare Realty 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 Healthcare Realty Trust 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 Healthcare Realty i.e., Healthcare Realty and Urban Edge go up and down completely randomly.

Pair Corralation between Healthcare Realty and Urban Edge

Allowing for the 90-day total investment horizon Healthcare Realty Trust is expected to under-perform the Urban Edge. But the stock apears to be less risky and, when comparing its historical volatility, Healthcare Realty Trust is 1.21 times less risky than Urban Edge. The stock trades about -0.08 of its potential returns per unit of risk. The Urban Edge Properties is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  2,091  in Urban Edge Properties on November 28, 2024 and sell it today you would lose (31.00) from holding Urban Edge Properties or give up 1.48% of portfolio value over 90 days.

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

Healthcare Realty Trust  vs.  Urban Edge Properties

Healthcare Realty Trust

Risk-Adjusted Performance

Very Weak

Over the last 90 days Healthcare Realty Trust has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest unsteady performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Urban Edge Properties

Risk-Adjusted Performance

Very Weak

Over the last 90 days Urban Edge Properties has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Healthcare Realty and Urban Edge

The main advantage of trading using opposite Healthcare Realty and Urban Edge positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Healthcare Realty 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 Healthcare Realty Trust 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.