Correlation Between Arbor Realty and Barings Corporate

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

Diversification Opportunities for Arbor Realty and Barings Corporate

-0.15

Correlation Coefficient

Arbor Realty  Barings Corporate

Good diversification

The 3 months correlation between Arbor and Barings is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Arbor Realty Trust and Barings Corporate Investors in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Barings Corporate 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 Barings Corporate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Barings Corporate has no effect on the direction of Arbor Realty i.e., Arbor Realty and Barings Corporate go up and down completely randomly.

Pair Corralation between Arbor Realty and Barings Corporate

Considering the 90-day investment horizon Arbor Realty Trust is expected to under-perform the Barings Corporate. In addition to that, Arbor Realty is 1.14 times more volatile than Barings Corporate Investors. It trades about -0.04 of its total potential returns per unit of risk. Barings Corporate Investors is currently generating about 0.06 per unit of volatility. If you would invest  1,913  in Barings Corporate Investors on December 19, 2024 and sell it today you would earn a total of  117.00  from holding Barings Corporate Investors or generate 6.12% return on investment over 90 days.

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

Arbor Realty Trust  vs.  Barings Corporate Investors

Arbor Realty Trust

Risk-Adjusted Performance

Very Weak

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

Barings Corporate

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Barings Corporate Investors are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite fairly uncertain fundamental indicators, Barings Corporate may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Arbor Realty and Barings Corporate

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

The idea behind Arbor Realty Trust and Barings Corporate Investors 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.