Correlation Between American Homes and UMH Properties

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

By analyzing existing cross correlation between American Homes 4 and UMH Properties, you can compare the effects of market volatilities on American Homes 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 American Homes with a short position of UMH Properties. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Homes and UMH Properties.

Diversification Opportunities for American Homes and UMH Properties

0.12

Correlation Coefficient

American Homes  UMH Properties

Average diversification

The 3 months correlation between American and UMH is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding American Homes 4 and UMH Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UMH Properties and American Homes 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 American Homes 4 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 American Homes i.e., American Homes and UMH Properties go up and down completely randomly.

Pair Corralation between American Homes and UMH Properties

Considering the 90-day investment horizon American Homes 4 is expected to under-perform the UMH Properties. But the stock apears to be less risky and, when comparing its historical volatility, American Homes 4 is 1.11 times less risky than UMH Properties. The stock trades about -0.13 of its potential returns per unit of risk. The UMH Properties is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  1,707  in UMH Properties on May 7, 2025 and sell it today you would lose (43.00) from holding UMH Properties or give up 2.52% of portfolio value over 90 days.

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

American Homes 4  vs.  UMH Properties

American Homes 4

Risk-Adjusted Performance

Weakest

Over the last 90 days American Homes 4 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's primary indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

UMH Properties

Risk-Adjusted Performance

Weakest

Over the last 90 days UMH Properties has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong primary indicators, UMH Properties is not utilizing all of its potentials. The newest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with American Homes and UMH Properties

The main advantage of trading using opposite American Homes and UMH Properties positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Homes 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 American Homes 4 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 CEOs Directory module to screen CEOs from public companies around the world.