Correlation Between Regency Centers and Urban Edge

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

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

Diversification Opportunities for Regency Centers and Urban Edge

0.47

Correlation Coefficient

Regency Centers  Urban Edge

Very weak diversification

The 3 months correlation between Regency and Urban is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Regency Centers 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 Regency Centers 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 Regency Centers 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 Regency Centers i.e., Regency Centers and Urban Edge go up and down completely randomly.

Pair Corralation between Regency Centers and Urban Edge

Considering the 90-day investment horizon Regency Centers is expected to generate 1.3 times less return on investment than Urban Edge. But when comparing it to its historical volatility, Regency Centers is 1.22 times less risky than Urban Edge. It trades about 0.06 of its potential returns per unit of risk. Urban Edge Properties is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  1,302  in Urban Edge Properties on December 1, 2024 and sell it today you would earn a total of  730.00  from holding Urban Edge Properties or generate 56.07% return on investment over 90 days.

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

Regency Centers  vs.  Urban Edge Properties

Regency Centers

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Regency Centers are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical and fundamental indicators, Regency Centers is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

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 Regency Centers and Urban Edge

The main advantage of trading using opposite Regency Centers and Urban Edge positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Regency Centers 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 Regency Centers 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.