Correlation Between UDR and Elme Communities

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

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

Diversification Opportunities for UDR and Elme Communities

0.23

Correlation Coefficient

UDR  Elme Communities

Modest diversification

The 3 months correlation between UDR and Elme is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding UDR Inc and Elme Communities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elme Communities and UDR 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 UDR Inc are associated (or correlated) with Elme Communities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elme Communities has no effect on the direction of UDR i.e., UDR and Elme Communities go up and down completely randomly.

Pair Corralation between UDR and Elme Communities

Considering the 90-day investment horizon UDR Inc is expected to generate 0.88 times more return on investment than Elme Communities. However, UDR Inc is 1.14 times less risky than Elme Communities. It trades about -0.19 of its potential returns per unit of risk. Elme Communities is currently generating about -0.28 per unit of risk. If you would invest  4,557  in UDR Inc on September 25, 2024 and sell it today you would lose (211.00) from holding UDR Inc or give up 4.63% of portfolio value over 90 days.

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

UDR Inc  vs.  Elme Communities

UDR Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days UDR Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable fundamental indicators, UDR is not utilizing all of its potentials. The newest stock price agitation, may contribute to short-term losses for the retail investors.

Elme Communities

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Elme Communities has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's primary indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with UDR and Elme Communities

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

The idea behind UDR Inc and Elme Communities 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.