Correlation Between National Retail and Urstadt Biddle

Can any of the company-specific risk be diversified away by investing in both National Retail and Urstadt Biddle 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 National Retail and Urstadt Biddle into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for National Retail and Urstadt Biddle

-0.91

Correlation Coefficient

National Retail  Urstadt Biddle

Pay attention - limited upside

The 3 months correlation between National and Urstadt is -0.91. Overlapping area represents the amount of risk that can be diversified away by holding National Retail Properties and Urstadt Biddle Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Urstadt Biddle Properties and National Retail 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 National Retail Properties are associated (or correlated) with Urstadt Biddle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Urstadt Biddle Properties has no effect on the direction of National Retail i.e., National Retail and Urstadt Biddle go up and down completely randomly.

Pair Corralation between National Retail and Urstadt Biddle

Considering the 90-day investment horizon National Retail is expected to generate 151.77 times less return on investment than Urstadt Biddle. But when comparing it to its historical volatility, National Retail Properties is 1.8 times less risky than Urstadt Biddle. It trades about 0.0 of its potential returns per unit of risk. Urstadt Biddle Properties is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  1,788  in Urstadt Biddle Properties on September 28, 2024 and sell it today you would earn a total of  486.00  from holding Urstadt Biddle Properties or generate 27.18% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	27.47%
Values	Daily Returns

National Retail Properties  vs.  Urstadt Biddle Properties

National Retail Prop

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days National Retail Properties has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Urstadt Biddle Properties

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Urstadt Biddle Properties has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental drivers, Urstadt Biddle is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with National Retail and Urstadt Biddle

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

The idea behind National Retail Properties and Urstadt Biddle 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..