Correlation Between UMH Properties and Veris Residential

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

By analyzing existing cross correlation between UMH Properties and Veris Residential, you can compare the effects of market volatilities on UMH Properties and Veris Residential 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 Veris Residential. Check out your portfolio center. Please also check ongoing floating volatility patterns of UMH Properties and Veris Residential.

Diversification Opportunities for UMH Properties and Veris Residential

0.31

Correlation Coefficient

UMH Properties  Veris Residential

Weak diversification

The 3 months correlation between UMH and Veris is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding UMH Properties and Veris Residential in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Veris Residential 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 Veris Residential. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Veris Residential has no effect on the direction of UMH Properties i.e., UMH Properties and Veris Residential go up and down completely randomly.

Pair Corralation between UMH Properties and Veris Residential

Assuming the 90 days trading horizon UMH Properties is expected to generate 10.34 times less return on investment than Veris Residential. But when comparing it to its historical volatility, UMH Properties is 2.7 times less risky than Veris Residential. It trades about 0.01 of its potential returns per unit of risk. Veris Residential is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  1,638  in Veris Residential on December 27, 2024 and sell it today you would earn a total of  35.00  from holding Veris Residential or generate 2.14% return on investment over 90 days.

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

UMH Properties  vs.  Veris Residential

UMH Properties

Risk-Adjusted Performance

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.

Veris Residential

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Veris Residential are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Veris Residential is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with UMH Properties and Veris Residential

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

The idea behind UMH Properties and Veris Residential 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.