Correlation Between Urban Edge and Weyerhaeuser

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

Diversification Opportunities for Urban Edge and Weyerhaeuser

-0.13

Correlation Coefficient

Urban Edge  Weyerhaeuser

Good diversification

The 3 months correlation between Urban and Weyerhaeuser is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Urban Edge Properties and Weyerhaeuser in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Weyerhaeuser 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 Weyerhaeuser. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Weyerhaeuser has no effect on the direction of Urban Edge i.e., Urban Edge and Weyerhaeuser go up and down completely randomly.

Pair Corralation between Urban Edge and Weyerhaeuser

Allowing for the 90-day total investment horizon Urban Edge Properties is expected to generate 0.72 times more return on investment than Weyerhaeuser. However, Urban Edge Properties is 1.39 times less risky than Weyerhaeuser. It trades about 0.2 of its potential returns per unit of risk. Weyerhaeuser is currently generating about 0.08 per unit of risk. If you would invest  2,061  in Urban Edge Properties on August 31, 2024 and sell it today you would earn a total of  270.00  from holding Urban Edge Properties or generate 13.1% return on investment over 90 days.

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

Urban Edge Properties  vs.  Weyerhaeuser

Urban Edge Properties

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Urban Edge Properties are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Urban Edge exhibited solid returns over the last few months and may actually be approaching a breakup point.

Weyerhaeuser

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Weyerhaeuser are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Weyerhaeuser may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Urban Edge and Weyerhaeuser

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

The idea behind Urban Edge Properties and Weyerhaeuser 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.