Correlation Between Armada Hflr and Transam Short

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

Diversification Opportunities for Armada Hflr and Transam Short

0.36

Correlation Coefficient

Armada Hflr  Transam Short

Weak diversification

The 3 months correlation between Armada and Transam is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Armada Hflr Pr and Transam Short Term Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transam Short Term 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 Transam Short. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transam Short Term has no effect on the direction of Armada Hflr i.e., Armada Hflr and Transam Short go up and down completely randomly.

Pair Corralation between Armada Hflr and Transam Short

Considering the 90-day investment horizon Armada Hflr is expected to generate 1.32 times less return on investment than Transam Short. In addition to that, Armada Hflr is 10.44 times more volatile than Transam Short Term Bond. It trades about 0.01 of its total potential returns per unit of risk. Transam Short Term Bond is currently generating about 0.13 per unit of volatility. If you would invest  888.00  in Transam Short Term Bond on September 20, 2024 and sell it today you would earn a total of  90.00  from holding Transam Short Term Bond or generate 10.14% return on investment over 90 days.

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

Armada Hflr Pr  vs.  Transam Short Term Bond

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.

Transam Short Term

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Transam Short Term Bond has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Transam Short 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 Transam Short

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

The idea behind Armada Hflr Pr and Transam Short Term Bond 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.