Correlation Between UMH Properties and American Homes
Can any of the company-specific risk be diversified away by investing in both UMH Properties and American Homes 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 UMH Properties and American Homes into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between UMH Properties and American Homes 4, you can compare the effects of market volatilities on UMH Properties and American Homes 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 UMH Properties with a short position of American Homes. Check out your portfolio center. Please also check ongoing floating volatility patterns of UMH Properties and American Homes.
Diversification Opportunities for UMH Properties and American Homes
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between UMH and American is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding UMH Properties and American Homes 4 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Homes 4 and UMH Properties 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 UMH Properties are associated (or correlated) with American Homes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Homes 4 has no effect on the direction of UMH Properties i.e., UMH Properties and American Homes go up and down completely randomly.
Pair Corralation between UMH Properties and American Homes
Assuming the 90 days trading horizon UMH Properties is expected to under-perform the American Homes. But the preferred stock apears to be less risky and, when comparing its historical volatility, UMH Properties is 1.43 times less risky than American Homes. The preferred stock trades about -0.02 of its potential returns per unit of risk. The American Homes 4 is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 2,237 in American Homes 4 on November 3, 2024 and sell it today you would earn a total of 76.00 from holding American Homes 4 or generate 3.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
UMH Properties vs. American Homes 4
Performance |
| Timeline |
| UMH Properties |
| American Homes 4 |
UMH Properties and American Homes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with UMH Properties and American Homes
The main advantage of trading using opposite UMH Properties and American Homes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UMH Properties position performs unexpectedly, American Homes 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 American Homes will offset losses from the drop in American Homes' long position.| UMH Properties vs. American Homes 4 | UMH Properties vs. Mid America Apartment Communities | UMH Properties vs. Clipper Realty | UMH Properties vs. American Homes 4 |
| American Homes vs. Mid America Apartment Communities | American Homes vs. UMH Properties | American Homes vs. Clipper Realty | American Homes 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
Other Complementary Tools
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine |