Correlation Between Armada Hflr and ETF Series

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

Diversification Opportunities for Armada Hflr and ETF Series

-0.56

Correlation Coefficient

Armada Hflr  ETF Series

Excellent diversification

The 3 months correlation between Armada and ETF is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Armada Hflr Pr and ETF Series Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ETF Series Solutions 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 ETF Series. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ETF Series Solutions has no effect on the direction of Armada Hflr i.e., Armada Hflr and ETF Series go up and down completely randomly.

Pair Corralation between Armada Hflr and ETF Series

Considering the 90-day investment horizon Armada Hflr Pr is expected to under-perform the ETF Series. In addition to that, Armada Hflr is 10.86 times more volatile than ETF Series Solutions. It trades about -0.09 of its total potential returns per unit of risk. ETF Series Solutions is currently generating about 0.37 per unit of volatility. If you would invest  2,504  in ETF Series Solutions on October 20, 2024 and sell it today you would earn a total of  26.00  from holding ETF Series Solutions or generate 1.04% return on investment over 90 days.

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

Armada Hflr Pr  vs.  ETF Series Solutions

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.

ETF Series Solutions

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ETF Series Solutions are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable forward indicators, ETF Series is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Armada Hflr and ETF Series

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

The idea behind Armada Hflr Pr and ETF Series Solutions 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.

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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.