Correlation Between UDR and Camden Property

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

By analyzing existing cross correlation between UDR Inc and Camden Property Trust, you can compare the effects of market volatilities on UDR and Camden Property 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 Camden Property. Check out your portfolio center. Please also check ongoing floating volatility patterns of UDR and Camden Property.

Diversification Opportunities for UDR and Camden Property

0.81

Correlation Coefficient

UDR  Camden Property

Very poor diversification

The 3 months correlation between UDR and Camden is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding UDR Inc and Camden Property Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Camden Property Trust 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 Camden Property. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Camden Property Trust has no effect on the direction of UDR i.e., UDR and Camden Property go up and down completely randomly.

Pair Corralation between UDR and Camden Property

Considering the 90-day investment horizon UDR Inc is expected to generate 1.01 times more return on investment than Camden Property. However, UDR is 1.01 times more volatile than Camden Property Trust. It trades about 0.05 of its potential returns per unit of risk. Camden Property Trust is currently generating about 0.01 per unit of risk. If you would invest  4,449  in UDR Inc on September 3, 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	Strong
Accuracy	100.0%
Values	Daily Returns

UDR Inc  vs.  Camden Property Trust

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.

Camden Property Trust

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Camden Property Trust has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Camden Property is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with UDR and Camden Property

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

The idea behind UDR Inc and Camden Property Trust 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.