Correlation Between Armada Hflr and DIAMONDBACK

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

Diversification Opportunities for Armada Hflr and DIAMONDBACK

0.34

Correlation Coefficient

Armada Hflr  DIAMONDBACK

Weak diversification

The 3 months correlation between Armada and DIAMONDBACK is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Armada Hflr Pr and DIAMONDBACK ENERGY INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DIAMONDBACK ENERGY INC 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 DIAMONDBACK. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DIAMONDBACK ENERGY INC has no effect on the direction of Armada Hflr i.e., Armada Hflr and DIAMONDBACK go up and down completely randomly.

Pair Corralation between Armada Hflr and DIAMONDBACK

Considering the 90-day investment horizon Armada Hflr Pr is expected to under-perform the DIAMONDBACK. In addition to that, Armada Hflr is 2.32 times more volatile than DIAMONDBACK ENERGY INC. It trades about -0.08 of its total potential returns per unit of risk. DIAMONDBACK ENERGY INC is currently generating about -0.05 per unit of volatility. If you would invest  9,810  in DIAMONDBACK ENERGY INC on September 14, 2024 and sell it today you would lose (178.00) from holding DIAMONDBACK ENERGY INC or give up 1.81% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	87.3%
Values	Daily Returns

Armada Hflr Pr  vs.  DIAMONDBACK ENERGY INC

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.

DIAMONDBACK ENERGY INC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DIAMONDBACK ENERGY INC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, DIAMONDBACK is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Armada Hflr and DIAMONDBACK

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

The idea behind Armada Hflr Pr and DIAMONDBACK ENERGY INC 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..