Correlation Between Armada Hflr and Slate Office

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

Diversification Opportunities for Armada Hflr and Slate Office

-0.44

Correlation Coefficient

Armada Hflr  Slate Office

Very good diversification

The 3 months correlation between Armada and Slate is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Armada Hflr Pr and Slate Office REIT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Slate Office REIT 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 Slate Office. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Slate Office REIT has no effect on the direction of Armada Hflr i.e., Armada Hflr and Slate Office go up and down completely randomly.

Pair Corralation between Armada Hflr and Slate Office

Considering the 90-day investment horizon Armada Hflr Pr is expected to generate 0.2 times more return on investment than Slate Office. However, Armada Hflr Pr is 4.91 times less risky than Slate Office. It trades about -0.09 of its potential returns per unit of risk. Slate Office REIT is currently generating about -0.23 per unit of risk. If you would invest  1,107  in Armada Hflr Pr on September 17, 2024 and sell it today you would lose (15.00) from holding Armada Hflr Pr or give up 1.36% of portfolio value over 90 days.

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

Armada Hflr Pr  vs.  Slate Office REIT

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.

Slate Office REIT

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Slate Office REIT are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Slate Office reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Armada Hflr and Slate Office

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

The idea behind Armada Hflr Pr and Slate Office REIT 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.