Correlation Between Armada Hflr and Value Equity

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

Diversification Opportunities for Armada Hflr and Value Equity

-0.16

Correlation Coefficient

Armada Hflr  Value Equity

Good diversification

The 3 months correlation between Armada and Value is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Armada Hflr Pr and Value Equity Institutional in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Value Equity Institu 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 Value Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Value Equity Institu has no effect on the direction of Armada Hflr i.e., Armada Hflr and Value Equity go up and down completely randomly.

Pair Corralation between Armada Hflr and Value Equity

Considering the 90-day investment horizon Armada Hflr is expected to generate 1.28 times less return on investment than Value Equity. In addition to that, Armada Hflr is 1.89 times more volatile than Value Equity Institutional. It trades about 0.02 of its total potential returns per unit of risk. Value Equity Institutional is currently generating about 0.04 per unit of volatility. If you would invest  1,666  in Value Equity Institutional on September 16, 2024 and sell it today you would earn a total of  279.00  from holding Value Equity Institutional or generate 16.75% return on investment over 90 days.

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

Armada Hflr Pr  vs.  Value Equity Institutional

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 latest weak performance, the Stock's technical indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Value Equity Institu

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Value Equity Institutional has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Value Equity 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 Value Equity

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

The idea behind Armada Hflr Pr and Value Equity Institutional 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.