Correlation Between Artis REIT and Armada Hoffler

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Can any of the company-specific risk be diversified away by investing in both Artis REIT and Armada Hoffler 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 Artis REIT and Armada Hoffler into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Artis REIT and Armada Hoffler Properties, you can compare the effects of market volatilities on Artis REIT and Armada Hoffler 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 Artis REIT with a short position of Armada Hoffler. Check out your portfolio center. Please also check ongoing floating volatility patterns of Artis REIT and Armada Hoffler.

Diversification Opportunities for Artis REIT and Armada Hoffler

0.72
  Correlation Coefficient

Poor diversification

The 3 months correlation between Artis and Armada is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Artis REIT and Armada Hoffler Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Armada Hoffler Properties and Artis REIT 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 Artis REIT are associated (or correlated) with Armada Hoffler. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Armada Hoffler Properties has no effect on the direction of Artis REIT i.e., Artis REIT and Armada Hoffler go up and down completely randomly.

Pair Corralation between Artis REIT and Armada Hoffler

Assuming the 90 days horizon Artis REIT is expected to generate 4.21 times more return on investment than Armada Hoffler. However, Artis REIT is 4.21 times more volatile than Armada Hoffler Properties. It trades about 0.02 of its potential returns per unit of risk. Armada Hoffler Properties is currently generating about 0.04 per unit of risk. If you would invest  601.00  in Artis REIT on October 10, 2024 and sell it today you would lose (87.00) from holding Artis REIT or give up 14.48% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy86.67%
ValuesDaily Returns

Artis REIT  vs.  Armada Hoffler Properties

 Performance 
       Timeline  
Artis REIT 

Risk-Adjusted Performance

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Weak
 
Strong
Very Weak
Over the last 90 days Artis REIT 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 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.
Armada Hoffler Properties 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Armada Hoffler Properties has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong technical indicators, Armada Hoffler is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Artis REIT and Armada Hoffler Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Artis REIT and Armada Hoffler

The main advantage of trading using opposite Artis REIT and Armada Hoffler positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Artis REIT position performs unexpectedly, Armada Hoffler 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 Armada Hoffler will offset losses from the drop in Armada Hoffler's long position.
The idea behind Artis REIT and Armada Hoffler Properties 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.

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