Correlation Between Veris Residential and UDR

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

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

Diversification Opportunities for Veris Residential and UDR

0.69

Correlation Coefficient

Veris Residential  UDR

Poor diversification

The 3 months correlation between Veris and UDR is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Veris Residential and UDR Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UDR Inc and Veris Residential 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 Veris Residential are associated (or correlated) with UDR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UDR Inc has no effect on the direction of Veris Residential i.e., Veris Residential and UDR go up and down completely randomly.

Pair Corralation between Veris Residential and UDR

Considering the 90-day investment horizon Veris Residential is expected to generate 1.12 times more return on investment than UDR. However, Veris Residential is 1.12 times more volatile than UDR Inc. It trades about 0.07 of its potential returns per unit of risk. UDR Inc is currently generating about 0.05 per unit of risk. If you would invest  1,727  in Veris Residential on September 3, 2024 and sell it today you would earn a total of  98.00  from holding Veris Residential or generate 5.67% return on investment over 90 days.

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

Veris Residential  vs.  UDR Inc

Veris Residential

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Veris Residential are ranked lower than 5 (%) 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.

UDR Inc

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in UDR Inc are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable fundamental indicators, UDR is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Veris Residential and UDR

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

The idea behind Veris Residential and UDR Inc 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.