Correlation Between UDR and UMH Properties
Can any of the company-specific risk be diversified away by investing in both UDR 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 UDR and UMH Properties into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between UDR Inc and UMH Properties, you can compare the effects of market volatilities on UDR 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 UDR with a short position of UMH Properties. Check out your portfolio center. Please also check ongoing floating volatility patterns of UDR and UMH Properties.
Diversification Opportunities for UDR and UMH Properties
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between UDR and UMH is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding UDR Inc and UMH Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UMH Properties and UDR 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 UDR Inc 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 UDR i.e., UDR and UMH Properties go up and down completely randomly.
Pair Corralation between UDR and UMH Properties
Considering the 90-day investment horizon UDR Inc is expected to generate 0.84 times more return on investment than UMH Properties. However, UDR Inc is 1.19 times less risky than UMH Properties. It trades about 0.13 of its potential returns per unit of risk. UMH Properties is currently generating about 0.11 per unit of risk. If you would invest 3,440 in UDR Inc on August 27, 2024 and sell it today you would earn a total of 1,069 from holding UDR Inc or generate 31.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
UDR Inc vs. UMH Properties
Performance |
| Timeline |
| UDR Inc |
| UMH Properties |
UDR and UMH Properties Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with UDR and UMH Properties
The main advantage of trading using opposite UDR and UMH Properties positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UDR 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.| UDR vs. Essex Property Trust | UDR vs. Mid America Apartment Communities | UDR vs. Nexpoint Residential Trust |
| UMH Properties vs. Sun Communities | UMH Properties vs. Clipper Realty | UMH Properties vs. UDR Inc | UMH Properties vs. American Homes 4 |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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