Correlation Between Armada Hflr and Northern Quality

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

Diversification Opportunities for Armada Hflr and Northern Quality

-0.15

Correlation Coefficient

Armada Hflr  Northern Quality

Good diversification

The 3 months correlation between Armada and Northern is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Armada Hflr Pr and Northern Quality Esg in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northern Quality Esg 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 Northern Quality. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Northern Quality Esg has no effect on the direction of Armada Hflr i.e., Armada Hflr and Northern Quality go up and down completely randomly.

Pair Corralation between Armada Hflr and Northern Quality

Considering the 90-day investment horizon Armada Hflr Pr is expected to under-perform the Northern Quality. In addition to that, Armada Hflr is 1.59 times more volatile than Northern Quality Esg. It trades about -0.28 of its total potential returns per unit of risk. Northern Quality Esg is currently generating about -0.21 per unit of volatility. If you would invest  2,183  in Northern Quality Esg on September 24, 2024 and sell it today you would lose (72.00) from holding Northern Quality Esg or give up 3.3% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

Armada Hflr Pr  vs.  Northern Quality Esg

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.

Northern Quality Esg

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Northern Quality Esg are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Northern Quality 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 Northern Quality

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

The idea behind Armada Hflr Pr and Northern Quality Esg 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.