Correlation Between Arbor Realty and Tigo Energy

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

Diversification Opportunities for Arbor Realty and Tigo Energy

0.46

Correlation Coefficient

Arbor Realty  Tigo Energy

Very weak diversification

The 3 months correlation between Arbor and Tigo is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Arbor Realty Trust and Tigo Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tigo Energy 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 Tigo Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tigo Energy has no effect on the direction of Arbor Realty i.e., Arbor Realty and Tigo Energy go up and down completely randomly.

Pair Corralation between Arbor Realty and Tigo Energy

Considering the 90-day investment horizon Arbor Realty is expected to generate 1.02 times less return on investment than Tigo Energy. But when comparing it to its historical volatility, Arbor Realty Trust is 2.83 times less risky than Tigo Energy. It trades about 0.06 of its potential returns per unit of risk. Tigo Energy is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  110.00  in Tigo Energy on October 9, 2024 and sell it today you would lose (11.00) from holding Tigo Energy or give up 10.0% of portfolio value over 90 days.

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

Arbor Realty Trust  vs.  Tigo Energy

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.

Tigo Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tigo Energy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical and fundamental indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Arbor Realty and Tigo Energy

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

The idea behind Arbor Realty Trust and Tigo Energy 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.