Correlation Between Flagship Communities and UMH Properties

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

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

Diversification Opportunities for Flagship Communities and UMH Properties

0.62

Correlation Coefficient

Flagship Communities  UMH Properties

Poor diversification

The 3 months correlation between Flagship and UMH is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Flagship Communities Real and UMH Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UMH Properties and Flagship Communities 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 Flagship Communities Real are associated (or correlated) with UMH Properties. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UMH Properties has no effect on the direction of Flagship Communities i.e., Flagship Communities and UMH Properties go up and down completely randomly.

Pair Corralation between Flagship Communities and UMH Properties

Assuming the 90 days horizon Flagship Communities Real is expected to generate 1.22 times more return on investment than UMH Properties. However, Flagship Communities is 1.22 times more volatile than UMH Properties. It trades about 0.08 of its potential returns per unit of risk. UMH Properties is currently generating about 0.0 per unit of risk. If you would invest  1,525  in Flagship Communities Real on December 19, 2024 and sell it today you would earn a total of  111.00  from holding Flagship Communities Real or generate 7.28% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.33%
Values	Daily Returns

Flagship Communities Real  vs.  UMH Properties

Flagship Communities Real

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Flagship Communities Real are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating basic indicators, Flagship Communities may actually be approaching a critical reversion point that can send shares even higher in April 2025.

UMH Properties

Risk-Adjusted Performance

Very Weak

Over the last 90 days UMH Properties has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Pair Trading with Flagship Communities and UMH Properties

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

The idea behind Flagship Communities Real and UMH 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.