Correlation Between Armada Hflr and TRANS NATIONWIDE

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

Diversification Opportunities for Armada Hflr and TRANS NATIONWIDE

-0.52

Correlation Coefficient

Armada Hflr  TRANS NATIONWIDE

Excellent diversification

The 3 months correlation between Armada and TRANS is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Armada Hflr Pr and TRANS NATIONWIDE EXPRESS PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TRANS NATIONWIDE EXP 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 TRANS NATIONWIDE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TRANS NATIONWIDE EXP has no effect on the direction of Armada Hflr i.e., Armada Hflr and TRANS NATIONWIDE go up and down completely randomly.

Pair Corralation between Armada Hflr and TRANS NATIONWIDE

Considering the 90-day investment horizon Armada Hflr Pr is expected to under-perform the TRANS NATIONWIDE. But the stock apears to be less risky and, when comparing its historical volatility, Armada Hflr Pr is 1.09 times less risky than TRANS NATIONWIDE. The stock trades about -0.03 of its potential returns per unit of risk. The TRANS NATIONWIDE EXPRESS PLC is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  136.00  in TRANS NATIONWIDE EXPRESS PLC on October 17, 2024 and sell it today you would earn a total of  64.00  from holding TRANS NATIONWIDE EXPRESS PLC or generate 47.06% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	86.84%
Values	Daily Returns

Armada Hflr Pr  vs.  TRANS NATIONWIDE EXPRESS PLC

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 February 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

TRANS NATIONWIDE EXP

Risk-Adjusted Performance

24 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in TRANS NATIONWIDE EXPRESS PLC are ranked lower than 24 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent basic indicators, TRANS NATIONWIDE showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Armada Hflr and TRANS NATIONWIDE

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

The idea behind Armada Hflr Pr and TRANS NATIONWIDE EXPRESS PLC 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.