Correlation Between Urban Edge and Independence Realty

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

Diversification Opportunities for Urban Edge and Independence Realty

0.56

Correlation Coefficient

Urban Edge  Independence Realty

Very weak diversification

The 3 months correlation between Urban and Independence is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Urban Edge Properties and Independence Realty Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Independence Realty Trust 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 Independence Realty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Independence Realty Trust has no effect on the direction of Urban Edge i.e., Urban Edge and Independence Realty go up and down completely randomly.

Pair Corralation between Urban Edge and Independence Realty

Allowing for the 90-day total investment horizon Urban Edge Properties is expected to generate 0.81 times more return on investment than Independence Realty. However, Urban Edge Properties is 1.24 times less risky than Independence Realty. It trades about 0.08 of its potential returns per unit of risk. Independence Realty Trust is currently generating about 0.04 per unit of risk. If you would invest  2,143  in Urban Edge Properties on September 13, 2024 and sell it today you would earn a total of  100.00  from holding Urban Edge Properties or generate 4.67% return on investment over 90 days.

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

Urban Edge Properties  vs.  Independence Realty Trust

Urban Edge Properties

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Urban Edge Properties are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Urban Edge is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Independence Realty Trust

Risk-Adjusted Performance

3 of 100

Insignificant

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

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

The idea behind Urban Edge Properties and Independence Realty Trust 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.

Check out your portfolio center.

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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.