Correlation Between Equity Lifestyle and UMH Properties

Can any of the company-specific risk be diversified away by investing in both Equity Lifestyle 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 Equity Lifestyle and UMH Properties into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Equity Lifestyle Properties and UMH Properties, you can compare the effects of market volatilities on Equity Lifestyle 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 Equity Lifestyle with a short position of UMH Properties. Check out your portfolio center. Please also check ongoing floating volatility patterns of Equity Lifestyle and UMH Properties.

Diversification Opportunities for Equity Lifestyle and UMH Properties

-0.26

Correlation Coefficient

Equity Lifestyle  UMH Properties

Very good diversification

The 3 months correlation between Equity and UMH is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Equity Lifestyle Properties and UMH Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UMH Properties and Equity Lifestyle 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 Equity Lifestyle Properties 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 Equity Lifestyle i.e., Equity Lifestyle and UMH Properties go up and down completely randomly.

Pair Corralation between Equity Lifestyle and UMH Properties

Considering the 90-day investment horizon Equity Lifestyle Properties is expected to under-perform the UMH Properties. But the stock apears to be less risky and, when comparing its historical volatility, Equity Lifestyle Properties is 1.75 times less risky than UMH Properties. The stock trades about -0.04 of its potential returns per unit of risk. The UMH Properties is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  1,433  in UMH Properties on February 17, 2024 and sell it today you would earn a total of  176.00  from holding UMH Properties or generate 12.28% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Equity Lifestyle Properties  vs.  UMH Properties

Equity Lifestyle Pro

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Equity Lifestyle Properties has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable essential indicators, Equity Lifestyle is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

UMH Properties

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in UMH Properties are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent primary indicators, UMH Properties demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Equity Lifestyle and UMH Properties

The main advantage of trading using opposite Equity Lifestyle and UMH Properties positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Equity Lifestyle 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.

The idea behind Equity Lifestyle Properties and UMH Properties pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.