Correlation Between Urban Edge and Federal Realty

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

Diversification Opportunities for Urban Edge and Federal Realty

0.21

Correlation Coefficient

Urban Edge  Federal Realty

Modest diversification

The 3 months correlation between Urban and Federal is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Urban Edge Properties and Federal Realty Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federal Realty Investment 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 Federal Realty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federal Realty Investment has no effect on the direction of Urban Edge i.e., Urban Edge and Federal Realty go up and down completely randomly.

Pair Corralation between Urban Edge and Federal Realty

Allowing for the 90-day total investment horizon Urban Edge is expected to generate 1.19 times less return on investment than Federal Realty. In addition to that, Urban Edge is 1.32 times more volatile than Federal Realty Investment. It trades about 0.21 of its total potential returns per unit of risk. Federal Realty Investment is currently generating about 0.33 per unit of volatility. If you would invest  11,043  in Federal Realty Investment on September 2, 2024 and sell it today you would earn a total of  622.00  from holding Federal Realty Investment or generate 5.63% return on investment over 90 days.

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

Urban Edge Properties  vs.  Federal Realty Investment

Urban Edge Properties

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Urban Edge Properties are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Urban Edge may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Federal Realty Investment

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Federal Realty Investment are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Federal Realty 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 Urban Edge and Federal Realty

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

The idea behind Urban Edge Properties and Federal Realty Investment 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.