Correlation Between Veris Residential and Apartment Income

Can any of the company-specific risk be diversified away by investing in both Veris Residential and Apartment Income 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 Veris Residential and Apartment Income into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Veris Residential and Apartment Income REIT, you can compare the effects of market volatilities on Veris Residential and Apartment Income 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 Veris Residential with a short position of Apartment Income. Check out your portfolio center. Please also check ongoing floating volatility patterns of Veris Residential and Apartment Income.

Diversification Opportunities for Veris Residential and Apartment Income

0.3

Correlation Coefficient

Veris Residential  Apartment Income

Weak diversification

The 3 months correlation between Veris and Apartment is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Veris Residential and Apartment Income REIT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apartment Income REIT and Veris Residential 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 Veris Residential are associated (or correlated) with Apartment Income. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apartment Income REIT has no effect on the direction of Veris Residential i.e., Veris Residential and Apartment Income go up and down completely randomly.

Pair Corralation between Veris Residential and Apartment Income

Considering the 90-day investment horizon Veris Residential is expected to generate 1.18 times less return on investment than Apartment Income. In addition to that, Veris Residential is 9.31 times more volatile than Apartment Income REIT. It trades about 0.01 of its total potential returns per unit of risk. Apartment Income REIT is currently generating about 0.15 per unit of volatility. If you would invest  3,859  in Apartment Income REIT on March 5, 2024 and sell it today you would earn a total of  16.00  from holding Apartment Income REIT or generate 0.41% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Veris Residential  vs.  Apartment Income REIT

Veris Residential

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Veris Residential are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Veris Residential is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Apartment Income REIT

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Apartment Income REIT are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Apartment Income exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Veris Residential and Apartment Income

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

The idea behind Veris Residential and Apartment Income REIT 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.