Correlation Between Ascott Residence and Armada Hoffler

Can any of the company-specific risk be diversified away by investing in both Ascott Residence 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 Ascott Residence and Armada Hoffler into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Ascott Residence Trust and Armada Hoffler Properties, you can compare the effects of market volatilities on Ascott Residence 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 Ascott Residence with a short position of Armada Hoffler. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ascott Residence and Armada Hoffler.

Diversification Opportunities for Ascott Residence and Armada Hoffler

-0.77

Correlation Coefficient

Ascott Residence  Armada Hoffler

Pay attention - limited upside

The 3 months correlation between Ascott and Armada is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Ascott Residence Trust 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 Ascott Residence 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 Ascott Residence Trust 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 Ascott Residence i.e., Ascott Residence and Armada Hoffler go up and down completely randomly.

Pair Corralation between Ascott Residence and Armada Hoffler

Assuming the 90 days horizon Ascott Residence Trust is expected to generate 1.74 times more return on investment than Armada Hoffler. However, Ascott Residence is 1.74 times more volatile than Armada Hoffler Properties. It trades about 0.04 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  54.00  in Ascott Residence Trust on October 10, 2024 and sell it today you would earn a total of  18.00  from holding Ascott Residence Trust or generate 33.33% return on investment over 90 days.

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

Ascott Residence Trust  vs.  Armada Hoffler Properties

Ascott Residence Trust

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ascott Residence Trust are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Ascott Residence may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Armada Hoffler Properties

Risk-Adjusted Performance

0 of 100

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.

Pair Trading with Ascott Residence and Armada Hoffler

The main advantage of trading using opposite Ascott Residence and Armada Hoffler positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ascott Residence 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 Ascott Residence Trust 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.

Check out your portfolio center.

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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.