Correlation Between Urban Edge and IREIT MarketVector

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

Diversification Opportunities for Urban Edge and IREIT MarketVector

0.2

Correlation Coefficient

Urban Edge  IREIT MarketVector

Modest diversification

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

Pair Corralation between Urban Edge and IREIT MarketVector

Allowing for the 90-day total investment horizon Urban Edge Properties is expected to under-perform the IREIT MarketVector. In addition to that, Urban Edge is 1.48 times more volatile than iREIT MarketVector. It trades about -0.12 of its total potential returns per unit of risk. iREIT MarketVector is currently generating about 0.0 per unit of volatility. If you would invest  1,983  in iREIT MarketVector on December 27, 2024 and sell it today you would lose (8.10) from holding iREIT MarketVector or give up 0.41% of portfolio value over 90 days.

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

Urban Edge Properties  vs.  iREIT MarketVector

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.

iREIT MarketVector

Risk-Adjusted Performance

Very Weak

Over the last 90 days iREIT MarketVector has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical and fundamental indicators, IREIT MarketVector 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 IREIT MarketVector

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

The idea behind Urban Edge Properties and iREIT MarketVector 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.