Correlation Between American Homes and UMH Properties
Can any of the company-specific risk be diversified away by investing in both American Homes and UMH Properties 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 American Homes and UMH Properties into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Homes 4 and UMH Properties, you can compare the effects of market volatilities on American Homes and UMH Properties 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 American Homes with a short position of UMH Properties. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Homes and UMH Properties.
Diversification Opportunities for American Homes and UMH Properties
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between American and UMH is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding American Homes 4 and UMH Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UMH Properties and American Homes 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 American Homes 4 are associated (or correlated) with UMH Properties. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UMH Properties has no effect on the direction of American Homes i.e., American Homes and UMH Properties go up and down completely randomly.
Pair Corralation between American Homes and UMH Properties
Considering the 90-day investment horizon American Homes is expected to generate 5.63 times less return on investment than UMH Properties. But when comparing it to its historical volatility, American Homes 4 is 1.27 times less risky than UMH Properties. It trades about 0.02 of its potential returns per unit of risk. UMH Properties is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 1,486 in UMH Properties on August 27, 2024 and sell it today you would earn a total of 438.00 from holding UMH Properties or generate 29.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Homes 4 vs. UMH Properties
Performance |
| Timeline |
| American Homes 4 |
| UMH Properties |
American Homes and UMH Properties Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Homes and UMH Properties
The main advantage of trading using opposite American Homes and UMH Properties positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Homes position performs unexpectedly, UMH Properties 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 UMH Properties will offset losses from the drop in UMH Properties' long position.| American Homes vs. Sun Communities | American Homes vs. Clipper Realty | American Homes vs. UDR Inc | American Homes vs. UMH Properties |
| UMH Properties vs. Sun Communities | UMH Properties vs. Clipper Realty | UMH Properties vs. UDR Inc | UMH Properties vs. American Homes 4 |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
Other Complementary Tools
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules | |
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated |