Correlation Between Arbor Realty and SIMON

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

Diversification Opportunities for Arbor Realty and SIMON

-0.27

Correlation Coefficient

Arbor Realty  SIMON

Very good diversification

The 3 months correlation between Arbor and SIMON is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Arbor Realty Trust and SIMON PPTY GROUP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SIMON PPTY GROUP 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 SIMON. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SIMON PPTY GROUP has no effect on the direction of Arbor Realty i.e., Arbor Realty and SIMON go up and down completely randomly.

Pair Corralation between Arbor Realty and SIMON

Considering the 90-day investment horizon Arbor Realty Trust is expected to under-perform the SIMON. In addition to that, Arbor Realty is 23.22 times more volatile than SIMON PPTY GROUP. It trades about -0.04 of its total potential returns per unit of risk. SIMON PPTY GROUP is currently generating about 0.05 per unit of volatility. If you would invest  9,925  in SIMON PPTY GROUP on December 21, 2024 and sell it today you would earn a total of  29.00  from holding SIMON PPTY GROUP or generate 0.29% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

Arbor Realty Trust  vs.  SIMON PPTY GROUP

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 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.

SIMON PPTY GROUP

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in SIMON PPTY GROUP are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, SIMON is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Arbor Realty and SIMON

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

The idea behind Arbor Realty Trust and SIMON PPTY GROUP 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.