Correlation Between Continental and UDR
Can any of the company-specific risk be diversified away by investing in both Continental 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 Continental and UDR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Camden Property Trust and UDR Inc, you can compare the effects of market volatilities on Continental 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 Continental with a short position of UDR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Continental and UDR.
Diversification Opportunities for Continental and UDR
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Continental and UDR is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Camden Property Trust and UDR Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UDR Inc and Continental 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 Camden Property Trust 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 Continental i.e., Continental and UDR go up and down completely randomly.
Pair Corralation between Continental and UDR
Assuming the 90 days horizon Camden Property Trust is expected to under-perform the UDR. But the stock apears to be less risky and, when comparing its historical volatility, Camden Property Trust is 1.11 times less risky than UDR. The stock trades about -0.17 of its potential returns per unit of risk. The UDR Inc is currently generating about -0.15 of returns per unit of risk over similar time horizon. If you would invest 4,111 in UDR Inc on December 13, 2024 and sell it today you would lose (178.00) from holding UDR Inc or give up 4.33% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Camden Property Trust vs. UDR Inc
Performance |
| Timeline |
| Camden Property Trust |
| UDR Inc |
Continental and UDR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Continental and UDR
The main advantage of trading using opposite Continental and UDR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Continental 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.| Continental vs. The Boston Beer | Continental vs. Medical Properties Trust | Continental vs. China Resources Beer | Continental vs. MOLSON RS BEVERAGE |
| UDR vs. Meli Hotels International | UDR vs. InterContinental Hotels Group | UDR vs. GOLDQUEST MINING | UDR vs. Nippon Light Metal |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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