Correlation Between Arbor Realty and New York

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

By analyzing existing cross correlation between Arbor Realty Trust and New York Mortgage, you can compare the effects of market volatilities on Arbor Realty and New York 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 Arbor Realty with a short position of New York. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arbor Realty and New York.

Diversification Opportunities for Arbor Realty and New York

0.69

Correlation Coefficient

Arbor Realty  New York

Poor diversification

The 3 months correlation between Arbor and New is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Arbor Realty Trust and New York Mortgage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New York Mortgage and Arbor Realty 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 Arbor Realty Trust are associated (or correlated) with New York. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New York Mortgage has no effect on the direction of Arbor Realty i.e., Arbor Realty and New York go up and down completely randomly.

Pair Corralation between Arbor Realty and New York

Assuming the 90 days trading horizon Arbor Realty Trust is expected to generate 1.19 times more return on investment than New York. However, Arbor Realty is 1.19 times more volatile than New York Mortgage. It trades about 0.15 of its potential returns per unit of risk. New York Mortgage is currently generating about 0.1 per unit of risk. If you would invest  1,739  in Arbor Realty Trust on September 2, 2024 and sell it today you would earn a total of  181.00  from holding Arbor Realty Trust or generate 10.41% return on investment over 90 days.

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

Arbor Realty Trust  vs.  New York Mortgage

Arbor Realty Trust

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Arbor Realty Trust are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Arbor Realty may actually be approaching a critical reversion point that can send shares even higher in January 2025.

New York Mortgage

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in New York Mortgage are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, New York is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Arbor Realty and New York

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

The idea behind Arbor Realty Trust and New York Mortgage 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.