Correlation Between Mid America and UDR
Can any of the company-specific risk be diversified away by investing in both Mid America 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 Mid America and UDR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mid America Apartment Communities and UDR Inc, you can compare the effects of market volatilities on Mid America 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 Mid America with a short position of UDR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mid America and UDR.
Diversification Opportunities for Mid America and UDR
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Mid and UDR is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Mid America Apartment Communit and UDR Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UDR Inc and Mid America 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 Mid America Apartment Communities 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 Mid America i.e., Mid America and UDR go up and down completely randomly.
Pair Corralation between Mid America and UDR
Considering the 90-day investment horizon Mid America is expected to generate 2.8 times less return on investment than UDR. But when comparing it to its historical volatility, Mid America Apartment Communities is 1.1 times less risky than UDR. It trades about 0.02 of its potential returns per unit of risk. UDR Inc is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 4,376 in UDR Inc on August 28, 2024 and sell it today you would earn a total of 181.00 from holding UDR Inc or generate 4.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mid America Apartment Communit vs. UDR Inc
Performance |
| Timeline |
| Mid America Apartment |
| UDR Inc |
Mid America and UDR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mid America and UDR
The main advantage of trading using opposite Mid America and UDR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mid America 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.| Mid America vs. AvalonBay Communities | Mid America vs. Essex Property Trust | Mid America vs. Equity Residential | Mid America vs. UDR Inc |
| UDR vs. AvalonBay Communities | UDR vs. Essex Property Trust | UDR vs. Mid America Apartment Communities | UDR vs. Camden Property 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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