Correlation Between Armada Hoffler and CTO Realty

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

Diversification Opportunities for Armada Hoffler and CTO Realty

0.59

Correlation Coefficient

Armada Hoffler  CTO Realty

Very weak diversification

The 3 months correlation between Armada and CTO is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Armada Hoffler Properties and CTO Realty Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CTO Realty Growth 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 CTO Realty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CTO Realty Growth has no effect on the direction of Armada Hoffler i.e., Armada Hoffler and CTO Realty go up and down completely randomly.

Pair Corralation between Armada Hoffler and CTO Realty

Assuming the 90 days trading horizon Armada Hoffler is expected to generate 1.07 times less return on investment than CTO Realty. But when comparing it to its historical volatility, Armada Hoffler Properties is 1.31 times less risky than CTO Realty. It trades about 0.1 of its potential returns per unit of risk. CTO Realty Growth is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  1,973  in CTO Realty Growth on October 10, 2024 and sell it today you would earn a total of  248.00  from holding CTO Realty Growth or generate 12.57% return on investment over 90 days.

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

Armada Hoffler Properties  vs.  CTO Realty Growth

Armada Hoffler Properties

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Armada Hoffler Properties has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

CTO Realty Growth

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CTO Realty Growth has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Preferred Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Armada Hoffler and CTO Realty

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

The idea behind Armada Hoffler Properties and CTO Realty Growth 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..