Correlation Between Urban Edge and Agree Realty

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

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

Diversification Opportunities for Urban Edge and Agree Realty

0.86

Correlation Coefficient

Urban Edge  Agree Realty

Very poor diversification

The 3 months correlation between Urban and Agree is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Urban Edge Properties and Agree Realty in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Agree Realty and Urban Edge 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 Urban Edge Properties are associated (or correlated) with Agree Realty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Agree Realty has no effect on the direction of Urban Edge i.e., Urban Edge and Agree Realty go up and down completely randomly.

Pair Corralation between Urban Edge and Agree Realty

Allowing for the 90-day total investment horizon Urban Edge Properties is expected to generate 1.4 times more return on investment than Agree Realty. However, Urban Edge is 1.4 times more volatile than Agree Realty. It trades about 0.06 of its potential returns per unit of risk. Agree Realty is currently generating about 0.03 per unit of risk. If you would invest  1,427  in Urban Edge Properties on November 19, 2024 and sell it today you would earn a total of  647.00  from holding Urban Edge Properties or generate 45.34% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	99.8%
Values	Daily Returns

Urban Edge Properties  vs.  Agree Realty

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.

Agree Realty

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Urban Edge and Agree Realty

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

The idea behind Urban Edge Properties and Agree Realty 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.