Correlation Between Empire State and UMH Properties
Can any of the company-specific risk be diversified away by investing in both Empire State 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 Empire State and UMH Properties into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Empire State Realty and UMH Properties, you can compare the effects of market volatilities on Empire State 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 Empire State with a short position of UMH Properties. Check out your portfolio center. Please also check ongoing floating volatility patterns of Empire State and UMH Properties.
Diversification Opportunities for Empire State and UMH Properties
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Empire and UMH is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Empire State Realty and UMH Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UMH Properties and Empire State 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 Empire State Realty 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 Empire State i.e., Empire State and UMH Properties go up and down completely randomly.
Pair Corralation between Empire State and UMH Properties
Given the investment horizon of 90 days Empire State is expected to generate 1.37 times less return on investment than UMH Properties. In addition to that, Empire State is 2.06 times more volatile than UMH Properties. It trades about 0.06 of its total potential returns per unit of risk. UMH Properties is currently generating about 0.18 per unit of volatility. If you would invest 1,488 in UMH Properties on August 30, 2024 and sell it today you would earn a total of 438.00 from holding UMH Properties or generate 29.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 98.41% |
| Values | Daily Returns |
Empire State Realty vs. UMH Properties
Performance |
| Timeline |
| Empire State Realty |
| UMH Properties |
Empire State and UMH Properties Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Empire State and UMH Properties
The main advantage of trading using opposite Empire State and UMH Properties positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Empire State 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.| Empire State vs. Boston Properties | Empire State vs. Douglas Emmett | Empire State vs. Kilroy Realty Corp | Empire State vs. Highwoods Properties |
| UMH Properties vs. Clipper Realty | UMH Properties vs. UDR Inc | UMH Properties vs. Apartment Investment and | UMH Properties vs. Independence 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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