Correlation Between Armada Hflr and Merchants Bancorp
Can any of the company-specific risk be diversified away by investing in both Armada Hflr and Merchants Bancorp 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 Merchants Bancorp 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 Merchants Bancorp, you can compare the effects of market volatilities on Armada Hflr and Merchants Bancorp 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 Merchants Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Armada Hflr and Merchants Bancorp.
Diversification Opportunities for Armada Hflr and Merchants Bancorp
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Armada and Merchants is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Armada Hflr Pr and Merchants Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Merchants Bancorp 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 Merchants Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Merchants Bancorp has no effect on the direction of Armada Hflr i.e., Armada Hflr and Merchants Bancorp go up and down completely randomly.
Pair Corralation between Armada Hflr and Merchants Bancorp
Considering the 90-day investment horizon Armada Hflr Pr is expected to generate 1.8 times more return on investment than Merchants Bancorp. However, Armada Hflr is 1.8 times more volatile than Merchants Bancorp. It trades about -0.27 of its potential returns per unit of risk. Merchants Bancorp is currently generating about -0.51 per unit of risk. If you would invest 1,100 in Armada Hflr Pr on September 26, 2024 and sell it today you would lose (77.00) from holding Armada Hflr Pr or give up 7.0% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Armada Hflr Pr vs. Merchants Bancorp
Performance |
Timeline |
Armada Hflr Pr |
Merchants Bancorp |
Armada Hflr and Merchants Bancorp Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Armada Hflr and Merchants Bancorp
The main advantage of trading using opposite Armada Hflr and Merchants Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Armada Hflr position performs unexpectedly, Merchants Bancorp 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 Merchants Bancorp will offset losses from the drop in Merchants Bancorp's long position.Armada Hflr vs. Realty Income | Armada Hflr vs. Park Hotels Resorts | Armada Hflr vs. Power REIT | Armada Hflr vs. Urban Edge Properties |
Check out your portfolio center.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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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