Correlation Between UDR and Ross Stores

Can any of the company-specific risk be diversified away by investing in both UDR and Ross Stores 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 UDR and Ross Stores into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between UDR Inc and Ross Stores, you can compare the effects of market volatilities on UDR and Ross Stores 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 UDR with a short position of Ross Stores. Check out your portfolio center. Please also check ongoing floating volatility patterns of UDR and Ross Stores.

Diversification Opportunities for UDR and Ross Stores

-0.11

Correlation Coefficient

UDR  Ross Stores

Good diversification

The 3 months correlation between UDR and Ross is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding UDR Inc and Ross Stores in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ross Stores and UDR 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 UDR Inc are associated (or correlated) with Ross Stores. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ross Stores has no effect on the direction of UDR i.e., UDR and Ross Stores go up and down completely randomly.

Pair Corralation between UDR and Ross Stores

Assuming the 90 days horizon UDR Inc is expected to generate 0.93 times more return on investment than Ross Stores. However, UDR Inc is 1.08 times less risky than Ross Stores. It trades about -0.01 of its potential returns per unit of risk. Ross Stores is currently generating about -0.24 per unit of risk. If you would invest  4,120  in UDR Inc on December 27, 2024 and sell it today you would lose (50.00) from holding UDR Inc or give up 1.21% of portfolio value over 90 days.

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

UDR Inc  vs.  Ross Stores

UDR Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days UDR Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, UDR is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Ross Stores

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ross Stores has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with UDR and Ross Stores

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

The idea behind UDR Inc and Ross Stores 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.