Correlation Between UDR and Essex Property
Can any of the company-specific risk be diversified away by investing in both UDR and Essex Property 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 Essex Property into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between UDR Inc and Essex Property Trust, you can compare the effects of market volatilities on UDR and Essex Property 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 Essex Property. Check out your portfolio center. Please also check ongoing floating volatility patterns of UDR and Essex Property.
Diversification Opportunities for UDR and Essex Property
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between UDR and Essex is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding UDR Inc and Essex Property Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Essex Property Trust 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 Essex Property. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Essex Property Trust has no effect on the direction of UDR i.e., UDR and Essex Property go up and down completely randomly.
Pair Corralation between UDR and Essex Property
Assuming the 90 days horizon UDR Inc is expected to generate 0.92 times more return on investment than Essex Property. However, UDR Inc is 1.09 times less risky than Essex Property. It trades about -0.18 of its potential returns per unit of risk. Essex Property Trust is currently generating about -0.35 per unit of risk. If you would invest 4,310 in UDR Inc on September 23, 2024 and sell it today you would lose (145.00) from holding UDR Inc or give up 3.36% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
UDR Inc vs. Essex Property Trust
Performance |
| Timeline |
| UDR Inc |
| Essex Property Trust |
UDR and Essex Property Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with UDR and Essex Property
The main advantage of trading using opposite UDR and Essex Property positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UDR position performs unexpectedly, Essex Property 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 Essex Property will offset losses from the drop in Essex Property's long position.| UDR vs. Equity Residential | UDR vs. AvalonBay Communities | UDR vs. INVITATION HOMES DL | UDR vs. Mid America Apartment Communities |
| Essex Property vs. Equity Residential | Essex Property vs. AvalonBay Communities | Essex Property vs. UDR Inc | Essex Property vs. INVITATION HOMES DL |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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