Correlation Between Arbor Realty and Patria Latin

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

Diversification Opportunities for Arbor Realty and Patria Latin

-0.73

Correlation Coefficient

Arbor Realty  Patria Latin

Pay attention - limited upside

The 3 months correlation between Arbor and Patria is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Arbor Realty Trust and Patria Latin American in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Patria Latin American 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 Patria Latin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Patria Latin American has no effect on the direction of Arbor Realty i.e., Arbor Realty and Patria Latin go up and down completely randomly.

Pair Corralation between Arbor Realty and Patria Latin

Considering the 90-day investment horizon Arbor Realty Trust is expected to under-perform the Patria Latin. In addition to that, Arbor Realty is 16.23 times more volatile than Patria Latin American. It trades about -0.04 of its total potential returns per unit of risk. Patria Latin American is currently generating about 0.23 per unit of volatility. If you would invest  1,163  in Patria Latin American on December 19, 2024 and sell it today you would earn a total of  22.00  from holding Patria Latin American or generate 1.89% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.33%
Values	Daily Returns

Arbor Realty Trust  vs.  Patria Latin American

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.

Patria Latin American

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Patria Latin American are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Patria Latin is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Arbor Realty and Patria Latin

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

The idea behind Arbor Realty Trust and Patria Latin American 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.