Correlation Between Armada Hflr and Destinations Low

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

Diversification Opportunities for Armada Hflr and Destinations Low

0.34

Correlation Coefficient

Armada Hflr  Destinations Low

Weak diversification

The 3 months correlation between Armada and Destinations is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Armada Hflr Pr and Destinations Low Duration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Destinations Low Duration 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 Destinations Low. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Destinations Low Duration has no effect on the direction of Armada Hflr i.e., Armada Hflr and Destinations Low go up and down completely randomly.

Pair Corralation between Armada Hflr and Destinations Low

Considering the 90-day investment horizon Armada Hflr is expected to generate 1.96 times less return on investment than Destinations Low. In addition to that, Armada Hflr is 16.41 times more volatile than Destinations Low Duration. It trades about 0.01 of its total potential returns per unit of risk. Destinations Low Duration is currently generating about 0.27 per unit of volatility. If you would invest  842.00  in Destinations Low Duration on September 23, 2024 and sell it today you would earn a total of  117.00  from holding Destinations Low Duration or generate 13.9% return on investment over 90 days.

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

Armada Hflr Pr  vs.  Destinations Low Duration

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 weak performance in the last few months, the Stock's technical indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Destinations Low Duration

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Destinations Low Duration has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Destinations Low is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Armada Hflr and Destinations Low

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

The idea behind Armada Hflr Pr and Destinations Low Duration 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.