Correlation Between Armada Hoffler and Saul Centers

Can any of the company-specific risk be diversified away by investing in both Armada Hoffler and Saul Centers 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 Armada Hoffler and Saul Centers into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Armada Hoffler Properties and Saul Centers, you can compare the effects of market volatilities on Armada Hoffler and Saul Centers 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 Armada Hoffler with a short position of Saul Centers. Check out your portfolio center. Please also check ongoing floating volatility patterns of Armada Hoffler and Saul Centers.

Diversification Opportunities for Armada Hoffler and Saul Centers

0.28

Correlation Coefficient

Armada Hoffler  Saul Centers

Modest diversification

The 3 months correlation between Armada and Saul is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Armada Hoffler Properties and Saul Centers in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Saul Centers and Armada Hoffler 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 Armada Hoffler Properties are associated (or correlated) with Saul Centers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Saul Centers has no effect on the direction of Armada Hoffler i.e., Armada Hoffler and Saul Centers go up and down completely randomly.

Pair Corralation between Armada Hoffler and Saul Centers

Assuming the 90 days trading horizon Armada Hoffler Properties is expected to generate 0.77 times more return on investment than Saul Centers. However, Armada Hoffler Properties is 1.3 times less risky than Saul Centers. It trades about 0.04 of its potential returns per unit of risk. Saul Centers is currently generating about -0.01 per unit of risk. If you would invest  2,194  in Armada Hoffler Properties on December 29, 2024 and sell it today you would earn a total of  51.00  from holding Armada Hoffler Properties or generate 2.32% return on investment over 90 days.

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

Armada Hoffler Properties  vs.  Saul Centers

Armada Hoffler Properties

Risk-Adjusted Performance

Insignificant

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

Saul Centers

Risk-Adjusted Performance

Very Weak

Over the last 90 days Saul Centers has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Saul Centers is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Armada Hoffler and Saul Centers

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

The idea behind Armada Hoffler Properties and Saul Centers 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..