Correlation Between UMH Properties and InterRent Real

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

By analyzing existing cross correlation between UMH Properties and InterRent Real Estate, you can compare the effects of market volatilities on UMH Properties and InterRent Real 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 UMH Properties with a short position of InterRent Real. Check out your portfolio center. Please also check ongoing floating volatility patterns of UMH Properties and InterRent Real.

Diversification Opportunities for UMH Properties and InterRent Real

0.76

Correlation Coefficient

UMH Properties  InterRent Real

Poor diversification

The 3 months correlation between UMH and InterRent is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding UMH Properties and InterRent Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on InterRent Real Estate and UMH Properties 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 UMH Properties are associated (or correlated) with InterRent Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of InterRent Real Estate has no effect on the direction of UMH Properties i.e., UMH Properties and InterRent Real go up and down completely randomly.

Pair Corralation between UMH Properties and InterRent Real

Assuming the 90 days trading horizon UMH Properties is expected to generate 0.43 times more return on investment than InterRent Real. However, UMH Properties is 2.35 times less risky than InterRent Real. It trades about -0.06 of its potential returns per unit of risk. InterRent Real Estate is currently generating about -0.28 per unit of risk. If you would invest  2,345  in UMH Properties on October 23, 2024 and sell it today you would lose (52.00) from holding UMH Properties or give up 2.22% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.0%
Values	Daily Returns

UMH Properties  vs.  InterRent Real Estate

UMH Properties

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days UMH Properties has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical indicators, UMH Properties is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

InterRent Real Estate

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with UMH Properties and InterRent Real

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

The idea behind UMH Properties and InterRent Real Estate 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.