Correlation Between UMH Properties and Apartment Investment

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

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

Diversification Opportunities for UMH Properties and Apartment Investment

-0.24

Correlation Coefficient

UMH Properties  Apartment Investment

Very good diversification

The 3 months correlation between UMH and Apartment is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding UMH Properties and Apartment Investment and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apartment Investment and 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 Apartment Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apartment Investment and has no effect on the direction of UMH Properties i.e., UMH Properties and Apartment Investment go up and down completely randomly.

Pair Corralation between UMH Properties and Apartment Investment

Considering the 90-day investment horizon UMH Properties is expected to generate 24.41 times less return on investment than Apartment Investment. But when comparing it to its historical volatility, UMH Properties is 1.31 times less risky than Apartment Investment. It trades about 0.01 of its potential returns per unit of risk. Apartment Investment and is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  777.00  in Apartment Investment and on December 27, 2024 and sell it today you would earn a total of  88.00  from holding Apartment Investment and or generate 11.33% return on investment over 90 days.

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

UMH Properties  vs.  Apartment Investment and

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. Despite fairly strong primary indicators, UMH Properties is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Apartment Investment and

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Apartment Investment and are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak forward indicators, Apartment Investment may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with UMH Properties and Apartment Investment

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

The idea behind UMH Properties and Apartment Investment and 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.

Check out your portfolio center.

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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.