Correlation Between Armada Hflr and Newtek Business

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

By analyzing existing cross correlation between Armada Hflr Pr and Newtek Business Services, you can compare the effects of market volatilities on Armada Hflr and Newtek 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 Hflr with a short position of Newtek Business. Check out your portfolio center. Please also check ongoing floating volatility patterns of Armada Hflr and Newtek Business.

Diversification Opportunities for Armada Hflr and Newtek Business

-0.1

Correlation Coefficient

Armada Hflr  Newtek Business

Good diversification

The 3 months correlation between Armada and Newtek is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Armada Hflr Pr and Newtek Business Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Newtek Business Services and Armada Hflr 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 Hflr Pr are associated (or correlated) with Newtek Business. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Newtek Business Services has no effect on the direction of Armada Hflr i.e., Armada Hflr and Newtek Business go up and down completely randomly.

Pair Corralation between Armada Hflr and Newtek Business

Considering the 90-day investment horizon Armada Hflr Pr is expected to generate 0.88 times more return on investment than Newtek Business. However, Armada Hflr Pr is 1.14 times less risky than Newtek Business. It trades about -0.26 of its potential returns per unit of risk. Newtek Business Services is currently generating about -0.45 per unit of risk. If you would invest  1,115  in Armada Hflr Pr on September 27, 2024 and sell it today you would lose (78.00) from holding Armada Hflr Pr or give up 7.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Armada Hflr Pr  vs.  Newtek Business Services

Armada Hflr Pr

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Armada Hflr Pr has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong technical indicators, Armada Hflr is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Newtek Business Services

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Newtek Business Services are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Newtek Business reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Armada Hflr and Newtek Business

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

The idea behind Armada Hflr Pr and Newtek Business Services 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.