Correlation Between Urban Edge and City Office

Can any of the company-specific risk be diversified away by investing in both Urban Edge and City Office 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 City Office 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 City Office, you can compare the effects of market volatilities on Urban Edge and City Office 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 City Office. Check out your portfolio center. Please also check ongoing floating volatility patterns of Urban Edge and City Office.

Diversification Opportunities for Urban Edge and City Office

0.45

Correlation Coefficient

Urban Edge  City Office

Very weak diversification

The 3 months correlation between Urban and City is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Urban Edge Properties and City Office in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on City Office 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 City Office. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of City Office has no effect on the direction of Urban Edge i.e., Urban Edge and City Office go up and down completely randomly.

Pair Corralation between Urban Edge and City Office

Allowing for the 90-day total investment horizon Urban Edge Properties is expected to generate 0.8 times more return on investment than City Office. However, Urban Edge Properties is 1.25 times less risky than City Office. It trades about -0.04 of its potential returns per unit of risk. City Office is currently generating about -0.1 per unit of risk. If you would invest  2,091  in Urban Edge Properties on November 28, 2024 and sell it today you would lose (31.00) from holding Urban Edge Properties or give up 1.48% of portfolio value over 90 days.

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

Urban Edge Properties  vs.  City Office

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.

City Office

Risk-Adjusted Performance

Very Weak

Over the last 90 days City Office has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's forward indicators remain very healthy which may send shares a bit higher in March 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Urban Edge and City Office

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

The idea behind Urban Edge Properties and City Office 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.