Correlation Between Armada Hflr and VONOVIA SE

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

Diversification Opportunities for Armada Hflr and VONOVIA SE

-0.02

Correlation Coefficient

Armada Hflr  VONOVIA SE

Good diversification

The 3 months correlation between Armada and VONOVIA is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Armada Hflr Pr and VONOVIA SE ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VONOVIA SE ADR 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 VONOVIA SE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VONOVIA SE ADR has no effect on the direction of Armada Hflr i.e., Armada Hflr and VONOVIA SE go up and down completely randomly.

Pair Corralation between Armada Hflr and VONOVIA SE

Considering the 90-day investment horizon Armada Hflr Pr is expected to under-perform the VONOVIA SE. But the stock apears to be less risky and, when comparing its historical volatility, Armada Hflr Pr is 1.86 times less risky than VONOVIA SE. The stock trades about 0.0 of its potential returns per unit of risk. The VONOVIA SE ADR is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  1,111  in VONOVIA SE ADR on October 12, 2024 and sell it today you would earn a total of  269.00  from holding VONOVIA SE ADR or generate 24.21% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.0%
Values	Daily Returns

Armada Hflr Pr  vs.  VONOVIA SE ADR

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.

VONOVIA SE ADR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days VONOVIA SE ADR has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Armada Hflr and VONOVIA SE

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

The idea behind Armada Hflr Pr and VONOVIA SE ADR 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.