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

0.67

Correlation Coefficient

UMH Properties  InterRent Real

Poor diversification

The 3 months correlation between UMH and InterRent is 0.67. 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

Considering the 90-day investment horizon UMH Properties is expected to generate 4.47 times less return on investment than InterRent Real. But when comparing it to its historical volatility, UMH Properties is 1.06 times less risky than InterRent Real. It trades about 0.0 of its potential returns per unit of risk. InterRent Real Estate is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  711.00  in InterRent Real Estate on December 19, 2024 and sell it today you would earn a total of  3.00  from holding InterRent Real Estate or generate 0.42% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	65.0%
Values	Daily Returns

UMH Properties  vs.  InterRent Real Estate

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 recent stock price confusion, may contribute to short-horizon losses for the traders.

InterRent Real Estate

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in InterRent Real Estate are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, InterRent Real is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.