Correlation Between Armada Hoffler and PS Business

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

Diversification Opportunities for Armada Hoffler and PS Business

-0.37

Correlation Coefficient

Armada Hoffler  PS Business

Very good diversification

The 3 months correlation between Armada and PSBYP is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Armada Hoffler Properties and PS Business Parks in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PS Business Parks 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 PS Business. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PS Business Parks has no effect on the direction of Armada Hoffler i.e., Armada Hoffler and PS Business go up and down completely randomly.

Pair Corralation between Armada Hoffler and PS Business

If you would invest  1,400  in PS Business Parks on October 21, 2024 and sell it today you would earn a total of  0.00  from holding PS Business Parks or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	5.26%
Values	Daily Returns

Armada Hoffler Properties  vs.  PS Business Parks

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 latest weak performance, the Preferred Stock's technical indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

PS Business Parks

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PS Business Parks has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, PS Business is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Armada Hoffler and PS Business

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

The idea behind Armada Hoffler Properties and PS Business Parks 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.