Correlation Between Equity Residential and Apartment Income
Can any of the company-specific risk be diversified away by investing in both Equity Residential and Apartment Income 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 Equity Residential and Apartment Income into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Equity Residential and Apartment Income REIT, you can compare the effects of market volatilities on Equity Residential and Apartment Income 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 Equity Residential with a short position of Apartment Income. Check out your portfolio center. Please also check ongoing floating volatility patterns of Equity Residential and Apartment Income.
Diversification Opportunities for Equity Residential and Apartment Income
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between Equity and Apartment is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Equity Residential and Apartment Income REIT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apartment Income REIT and Equity 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 Equity Residential are associated (or correlated) with Apartment Income. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apartment Income REIT has no effect on the direction of Equity Residential i.e., Equity Residential and Apartment Income go up and down completely randomly.
Pair Corralation between Equity Residential and Apartment Income
Considering the 90-day investment horizon Equity Residential is expected to generate 0.71 times more return on investment than Apartment Income. However, Equity Residential is 1.41 times less risky than Apartment Income. It trades about 0.05 of its potential returns per unit of risk. Apartment Income REIT is currently generating about 0.02 per unit of risk. If you would invest 5,945 in Equity Residential on August 27, 2024 and sell it today you would earn a total of 1,634 from holding Equity Residential or generate 27.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 77.14% |
| Values | Daily Returns |
Equity Residential vs. Apartment Income REIT
Performance |
| Timeline |
| Equity Residential |
| Apartment Income REIT |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Equity Residential and Apartment Income Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Equity Residential and Apartment Income
The main advantage of trading using opposite Equity Residential and Apartment Income positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Equity Residential position performs unexpectedly, Apartment Income 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 Apartment Income will offset losses from the drop in Apartment Income's long position.| Equity Residential vs. Essex Property Trust | Equity Residential vs. Mid America Apartment Communities | Equity Residential vs. Camden Property Trust | Equity Residential vs. UDR Inc |
| Apartment Income vs. Clipper Realty | Apartment Income vs. UDR Inc | Apartment Income vs. Nexpoint Residential Trust | Apartment Income vs. BRT Realty Trust |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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