Correlation Between Federal Realty and Urban Edge
Can any of the company-specific risk be diversified away by investing in both Federal Realty and Urban Edge 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 Federal Realty and Urban Edge into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Federal Realty Investment and Urban Edge Properties, you can compare the effects of market volatilities on Federal Realty and Urban Edge 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 Federal Realty with a short position of Urban Edge. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federal Realty and Urban Edge.
Diversification Opportunities for Federal Realty and Urban Edge
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between Federal and Urban is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Federal Realty Investment and Urban Edge Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Urban Edge Properties and Federal Realty 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 Federal Realty Investment are associated (or correlated) with Urban Edge. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Urban Edge Properties has no effect on the direction of Federal Realty i.e., Federal Realty and Urban Edge go up and down completely randomly.
Pair Corralation between Federal Realty and Urban Edge
Assuming the 90 days trading horizon Federal Realty is expected to generate 6.71 times less return on investment than Urban Edge. But when comparing it to its historical volatility, Federal Realty Investment is 1.56 times less risky than Urban Edge. It trades about 0.02 of its potential returns per unit of risk. Urban Edge Properties is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 1,409 in Urban Edge Properties on August 31, 2024 and sell it today you would earn a total of 892.00 from holding Urban Edge Properties or generate 63.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Federal Realty Investment vs. Urban Edge Properties
Performance |
| Timeline |
| Federal Realty Investment |
| Urban Edge Properties |
Federal Realty and Urban Edge Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federal Realty and Urban Edge
The main advantage of trading using opposite Federal Realty and Urban Edge positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federal Realty position performs unexpectedly, Urban Edge 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 Urban Edge will offset losses from the drop in Urban Edge's long position.| Federal Realty vs. Site Centers Corp | Federal Realty vs. Urban Edge Properties | Federal Realty vs. Retail Opportunity Investments | Federal Realty vs. Brixmor Property |
| Urban Edge vs. Saul Centers | Urban Edge vs. Site Centers Corp | Urban Edge vs. Kite Realty Group | Urban Edge vs. Retail Opportunity Investments |
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.
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