Correlation Between UDR and AVANGRID

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

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

Diversification Opportunities for UDR and AVANGRID

-0.2

Correlation Coefficient

UDR  AVANGRID

Good diversification

The 3 months correlation between UDR and AVANGRID is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding UDR Inc and AVANGRID INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AVANGRID INC 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 AVANGRID. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AVANGRID INC has no effect on the direction of UDR i.e., UDR and AVANGRID go up and down completely randomly.

Pair Corralation between UDR and AVANGRID

Considering the 90-day investment horizon UDR Inc is expected to generate 1.26 times more return on investment than AVANGRID. However, UDR is 1.26 times more volatile than AVANGRID INC. It trades about 0.05 of its potential returns per unit of risk. AVANGRID INC is currently generating about -0.03 per unit of risk. If you would invest  4,295  in UDR Inc on December 31, 2024 and sell it today you would earn a total of  159.00  from holding UDR Inc or generate 3.7% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	88.52%
Values	Daily Returns

UDR Inc  vs.  AVANGRID INC

UDR Inc

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in UDR Inc are ranked lower than 4 (%) 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.

AVANGRID INC

Risk-Adjusted Performance

Very Weak

Over the last 90 days AVANGRID INC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, AVANGRID is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with UDR and AVANGRID

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

The idea behind UDR Inc and AVANGRID INC 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 Commodity Directory module to find actively traded commodities issued by global exchanges.