Correlation Between UDR and Apartment Investment

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

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

Diversification Opportunities for UDR and Apartment Investment

0.59

Correlation Coefficient

UDR  Apartment Investment

Very weak diversification

The 3 months correlation between UDR and Apartment is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding UDR Inc and Apartment Investment and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apartment Investment and and UDR 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 UDR Inc are associated (or correlated) with Apartment Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apartment Investment and has no effect on the direction of UDR i.e., UDR and Apartment Investment go up and down completely randomly.

Pair Corralation between UDR and Apartment Investment

Considering the 90-day investment horizon UDR Inc is expected to generate 1.02 times more return on investment than Apartment Investment. However, UDR is 1.02 times more volatile than Apartment Investment and. It trades about 0.05 of its potential returns per unit of risk. Apartment Investment and is currently generating about -0.03 per unit of risk. If you would invest  4,449  in UDR Inc on September 2, 2024 and sell it today you would earn a total of  137.00  from holding UDR Inc or generate 3.08% return on investment over 90 days.

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

UDR Inc  vs.  Apartment Investment and

UDR Inc

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in UDR Inc are ranked lower than 3 (%) 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.

Apartment Investment and

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Apartment Investment and has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable forward indicators, Apartment Investment is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with UDR and Apartment Investment

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

The idea behind UDR Inc and Apartment Investment and 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.