Correlation Between Urban Edge and SL Green

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

Diversification Opportunities for Urban Edge and SL Green

0.88

Correlation Coefficient

Urban Edge  SL Green

Very poor diversification

The 3 months correlation between Urban and SLG is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Urban Edge Properties and SL Green Realty in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SL Green Realty 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 SL Green. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SL Green Realty has no effect on the direction of Urban Edge i.e., Urban Edge and SL Green go up and down completely randomly.

Pair Corralation between Urban Edge and SL Green

Allowing for the 90-day total investment horizon Urban Edge is expected to generate 1.19 times less return on investment than SL Green. But when comparing it to its historical volatility, Urban Edge Properties is 1.69 times less risky than SL Green. It trades about 0.07 of its potential returns per unit of risk. SL Green Realty is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  5,549  in SL Green Realty on October 13, 2024 and sell it today you would earn a total of  633.00  from holding SL Green Realty or generate 11.41% return on investment over 90 days.

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

Urban Edge Properties  vs.  SL Green Realty

Urban Edge Properties

Risk-Adjusted Performance

0 of 100

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.

SL Green Realty

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SL Green Realty has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's essential indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Urban Edge and SL Green

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

The idea behind Urban Edge Properties and SL Green Realty 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.