Correlation Between Urban Edge and Riocan REIT

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

Diversification Opportunities for Urban Edge and Riocan REIT

-0.8

Correlation Coefficient

Urban Edge  Riocan REIT

Pay attention - limited upside

The 3 months correlation between Urban and Riocan is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Urban Edge Properties and Riocan REIT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Riocan REIT 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 Riocan REIT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Riocan REIT has no effect on the direction of Urban Edge i.e., Urban Edge and Riocan REIT go up and down completely randomly.

Pair Corralation between Urban Edge and Riocan REIT

Allowing for the 90-day total investment horizon Urban Edge Properties is expected to generate 0.8 times more return on investment than Riocan REIT. However, Urban Edge Properties is 1.26 times less risky than Riocan REIT. It trades about 0.08 of its potential returns per unit of risk. Riocan REIT is currently generating about -0.19 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 Against
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Urban Edge Properties  vs.  Riocan REIT

Urban Edge Properties

Risk-Adjusted Performance

6 of 100

OK

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.

Riocan REIT

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Riocan REIT has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's fundamental indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Urban Edge and Riocan REIT

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

The idea behind Urban Edge Properties and Riocan REIT 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.