Correlation Between One Liberty and Urban Edge

Can any of the company-specific risk be diversified away by investing in both One Liberty 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 One Liberty and Urban Edge into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for One Liberty and Urban Edge

-0.08

Correlation Coefficient

One Liberty  Urban Edge

Good diversification

The 3 months correlation between One and Urban is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding One Liberty Properties 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 One Liberty 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 One Liberty Properties 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 One Liberty i.e., One Liberty and Urban Edge go up and down completely randomly.

Pair Corralation between One Liberty and Urban Edge

Considering the 90-day investment horizon One Liberty Properties is expected to generate 1.11 times more return on investment than Urban Edge. However, One Liberty is 1.11 times more volatile than Urban Edge Properties. It trades about 0.41 of its potential returns per unit of risk. Urban Edge Properties is currently generating about 0.34 per unit of risk. If you would invest  2,157  in One Liberty Properties on February 13, 2024 and sell it today you would earn a total of  200.00  from holding One Liberty Properties or generate 9.27% return on investment over 90 days.

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

One Liberty Properties  vs.  Urban Edge Properties

One Liberty Properties

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in One Liberty Properties are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Even with relatively uncertain essential indicators, One Liberty reported solid returns over the last few months and may actually be approaching a breakup point.

Urban Edge Properties

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Urban Edge Properties has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Urban Edge is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with One Liberty and Urban Edge

The main advantage of trading using opposite One Liberty and Urban Edge positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if One Liberty position performs unexpectedly, Urban Edge 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 Urban Edge will offset losses from the drop in Urban Edge's long position.

The idea behind One Liberty Properties and Urban Edge 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.