Correlation Between Urban Edge and Real Estate
Can any of the company-specific risk be diversified away by investing in both Urban Edge and Real Estate 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 Urban Edge and Real Estate into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Urban Edge Properties and Real Estate Securities, you can compare the effects of market volatilities on Urban Edge and Real Estate 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 Urban Edge with a short position of Real Estate. Check out your portfolio center. Please also check ongoing floating volatility patterns of Urban Edge and Real Estate.
Diversification Opportunities for Urban Edge and Real Estate
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Urban and Real is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Urban Edge Properties and Real Estate Securities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Real Estate Securities and Urban Edge 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 Urban Edge Properties are associated (or correlated) with Real Estate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Real Estate Securities has no effect on the direction of Urban Edge i.e., Urban Edge and Real Estate go up and down completely randomly.
Pair Corralation between Urban Edge and Real Estate
Allowing for the 90-day total investment horizon Urban Edge Properties is expected to generate 1.24 times more return on investment than Real Estate. However, Urban Edge is 1.24 times more volatile than Real Estate Securities. It trades about 0.21 of its potential returns per unit of risk. Real Estate Securities is currently generating about 0.18 per unit of risk. If you would invest 2,199 in Urban Edge Properties on September 2, 2024 and sell it today you would earn a total of 102.00 from holding Urban Edge Properties or generate 4.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 85.71% |
| Values | Daily Returns |
Urban Edge Properties vs. Real Estate Securities
Performance |
| Timeline |
| Urban Edge Properties |
| Real Estate Securities |
Urban Edge and Real Estate Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Urban Edge and Real Estate
The main advantage of trading using opposite Urban Edge and Real Estate positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Urban Edge position performs unexpectedly, Real Estate 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 Real Estate will offset losses from the drop in Real Estate's long position.| Urban Edge vs. Federal Realty Investment | Urban Edge vs. National Retail Properties | Urban Edge vs. Kimco Realty |
| Real Estate vs. Strategic Asset Management | Real Estate vs. Strategic Asset Management | Real Estate vs. Strategic Asset Management | Real Estate vs. Strategic Asset Management |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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