Correlation Between American Realty and Five Point

Can any of the company-specific risk be diversified away by investing in both American Realty and Five Point 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 American Realty and Five Point into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between American Realty Investors and Five Point Holdings, you can compare the effects of market volatilities on American Realty and Five Point 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 American Realty with a short position of Five Point. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Realty and Five Point.

Diversification Opportunities for American Realty and Five Point

-0.58

Correlation Coefficient

American Realty  Five Point

Excellent diversification

The 3 months correlation between American and Five is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding American Realty Investors and Five Point Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Five Point Holdings and American Realty 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 American Realty Investors are associated (or correlated) with Five Point. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Five Point Holdings has no effect on the direction of American Realty i.e., American Realty and Five Point go up and down completely randomly.

Pair Corralation between American Realty and Five Point

Considering the 90-day investment horizon American Realty Investors is expected to under-perform the Five Point. In addition to that, American Realty is 1.06 times more volatile than Five Point Holdings. It trades about -0.04 of its total potential returns per unit of risk. Five Point Holdings is currently generating about 0.14 per unit of volatility. If you would invest  321.00  in Five Point Holdings on September 1, 2024 and sell it today you would earn a total of  85.00  from holding Five Point Holdings or generate 26.48% return on investment over 90 days.

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

American Realty Investors  vs.  Five Point Holdings

American Realty Investors

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days American Realty Investors has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Five Point Holdings

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Five Point Holdings are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak basic indicators, Five Point demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with American Realty and Five Point

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

The idea behind American Realty Investors and Five Point Holdings 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.