Correlation Between UMH Properties and Centerspace

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

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

Diversification Opportunities for UMH Properties and Centerspace

0.87

Correlation Coefficient

UMH Properties  Centerspace

Very poor diversification

The 3 months correlation between UMH and Centerspace is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding UMH Properties and Centerspace in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Centerspace 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 Centerspace. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Centerspace has no effect on the direction of UMH Properties i.e., UMH Properties and Centerspace go up and down completely randomly.

Pair Corralation between UMH Properties and Centerspace

Considering the 90-day investment horizon UMH Properties is expected to generate 1.35 times less return on investment than Centerspace. In addition to that, UMH Properties is 1.21 times more volatile than Centerspace. It trades about 0.26 of its total potential returns per unit of risk. Centerspace is currently generating about 0.42 per unit of volatility. If you would invest  6,075  in Centerspace on December 2, 2024 and sell it today you would earn a total of  544.00  from holding Centerspace or generate 8.95% return on investment over 90 days.

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

UMH Properties  vs.  Centerspace

UMH Properties

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in UMH Properties are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong primary indicators, UMH Properties is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Centerspace

Risk-Adjusted Performance

Very Weak

Over the last 90 days Centerspace has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest uncertain performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with UMH Properties and Centerspace

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

The idea behind UMH Properties and Centerspace 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 Valuation module to check real value of public entities based on technical and fundamental data.