Correlation Between Essential Properties and Armada Hflr

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

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

Diversification Opportunities for Essential Properties and Armada Hflr

-0.39

Correlation Coefficient

Essential Properties  Armada Hflr

Very good diversification

The 3 months correlation between Essential and Armada is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Essential Properties Realty and Armada Hflr Pr in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Armada Hflr Pr and Essential Properties 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 Essential Properties Realty are associated (or correlated) with Armada Hflr. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Armada Hflr Pr has no effect on the direction of Essential Properties i.e., Essential Properties and Armada Hflr go up and down completely randomly.

Pair Corralation between Essential Properties and Armada Hflr

Given the investment horizon of 90 days Essential Properties Realty is expected to generate 0.67 times more return on investment than Armada Hflr. However, Essential Properties Realty is 1.5 times less risky than Armada Hflr. It trades about 0.07 of its potential returns per unit of risk. Armada Hflr Pr is currently generating about -0.21 per unit of risk. If you would invest  3,092  in Essential Properties Realty on December 29, 2024 and sell it today you would earn a total of  168.00  from holding Essential Properties Realty or generate 5.43% return on investment over 90 days.

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

Essential Properties Realty  vs.  Armada Hflr Pr

Essential Properties

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Essential Properties Realty are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Essential Properties is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Armada Hflr Pr

Risk-Adjusted Performance

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 weak performance in the last few months, the Stock's technical indicators remain fairly strong which may send shares a bit higher in April 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Essential Properties and Armada Hflr

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

The idea behind Essential Properties Realty and Armada Hflr Pr 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.