Correlation Between Arbor Realty and Blackstone Mortgage

Can any of the company-specific risk be diversified away by investing in both Arbor Realty and Blackstone Mortgage 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 Blackstone Mortgage 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 Blackstone Mortgage Trust, you can compare the effects of market volatilities on Arbor Realty and Blackstone Mortgage 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 Blackstone Mortgage. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arbor Realty and Blackstone Mortgage.

Diversification Opportunities for Arbor Realty and Blackstone Mortgage

0.57

Correlation Coefficient

Arbor Realty  Blackstone Mortgage

Very weak diversification

The 3 months correlation between Arbor and Blackstone is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Arbor Realty Trust and Blackstone Mortgage Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blackstone Mortgage Trust 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 Blackstone Mortgage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blackstone Mortgage Trust has no effect on the direction of Arbor Realty i.e., Arbor Realty and Blackstone Mortgage go up and down completely randomly.

Pair Corralation between Arbor Realty and Blackstone Mortgage

Considering the 90-day investment horizon Arbor Realty Trust is expected to generate 0.98 times more return on investment than Blackstone Mortgage. However, Arbor Realty Trust is 1.02 times less risky than Blackstone Mortgage. It trades about 0.14 of its potential returns per unit of risk. Blackstone Mortgage Trust is currently generating about 0.08 per unit of risk. If you would invest  1,288  in Arbor Realty Trust on September 3, 2024 and sell it today you would earn a total of  167.00  from holding Arbor Realty Trust or generate 12.97% return on investment over 90 days.

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

Arbor Realty Trust  vs.  Blackstone Mortgage Trust

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. Even with relatively weak fundamental drivers, Arbor Realty reported solid returns over the last few months and may actually be approaching a breakup point.

Blackstone Mortgage Trust

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Blackstone Mortgage Trust are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak primary indicators, Blackstone Mortgage may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Arbor Realty and Blackstone Mortgage

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

The idea behind Arbor Realty Trust and Blackstone Mortgage Trust 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.

Check out your portfolio center.

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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.