Can any of the company-specific risk be diversified away by investing in both Acadia Realty and Urban Edge 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 Acadia Realty and Urban Edge into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Acadia Realty Trust and Urban Edge Properties, you can compare the effects of market volatilities on Acadia Realty and Urban Edge 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 Acadia Realty with a short position of Urban Edge. Check out your portfolio center. Please also check ongoing floating volatility patterns of Acadia Realty and Urban Edge.
Diversification Opportunities for Acadia Realty and Urban Edge
The 3 months correlation between Acadia and Urban is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Acadia Realty Trust and Urban Edge Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Urban Edge Properties and Acadia Realty 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 Acadia Realty Trust are associated (or correlated) with Urban Edge. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Urban Edge Properties has no effect on the direction of Acadia Realty i.e., Acadia Realty and Urban Edge go up and down completely randomly.
Pair Corralation between Acadia Realty and Urban Edge
Considering the 90-day investment horizon Acadia Realty is expected to generate 1.39 times less return on investment than Urban Edge. In addition to that, Acadia Realty is 1.13 times more volatile than Urban Edge Properties. It trades about 0.13 of its total potential returns per unit of risk. Urban Edge Properties is currently generating about 0.2 per unit of volatility. If you would invest 1,708 in Urban Edge Properties on March 6, 2024 and sell it today you would earn a total of 81.00 from holding Urban Edge Properties or generate 4.74% return on investment over 90 days.
Compared to the overall equity markets, risk-adjusted returns on investments in Acadia Realty Trust are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady forward-looking signals, Acadia Realty may actually be approaching a critical reversion point that can send shares even higher in July 2024.
Compared to the overall equity markets, risk-adjusted returns on investments in Urban Edge Properties are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile technical and fundamental indicators, Urban Edge may actually be approaching a critical reversion point that can send shares even higher in July 2024.