Correlation Between Arbor Realty and SK Growth

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

Diversification Opportunities for Arbor Realty and SK Growth

-0.7

Correlation Coefficient

Arbor Realty  SK Growth

Excellent diversification

The 3 months correlation between Arbor and SKGR is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Arbor Realty Trust and SK Growth Opportunities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SK Growth Opportunities 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 SK Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SK Growth Opportunities has no effect on the direction of Arbor Realty i.e., Arbor Realty and SK Growth go up and down completely randomly.

Pair Corralation between Arbor Realty and SK Growth

Considering the 90-day investment horizon Arbor Realty Trust is expected to under-perform the SK Growth. In addition to that, Arbor Realty is 5.8 times more volatile than SK Growth Opportunities. It trades about -0.2 of its total potential returns per unit of risk. SK Growth Opportunities is currently generating about 0.17 per unit of volatility. If you would invest  1,148  in SK Growth Opportunities on October 9, 2024 and sell it today you would earn a total of  15.00  from holding SK Growth Opportunities or generate 1.31% return on investment over 90 days.

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

Arbor Realty Trust  vs.  SK Growth Opportunities

Arbor Realty Trust

Risk-Adjusted Performance

0 of 100

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 latest weak performance, the Stock's fundamental drivers remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

SK Growth Opportunities

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SK Growth Opportunities are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable technical and fundamental indicators, SK Growth is not utilizing all of its potentials. The newest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Arbor Realty and SK Growth

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

The idea behind Arbor Realty Trust and SK Growth Opportunities 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.