Correlation Between Hampton Financial and Atrium Mortgage
Can any of the company-specific risk be diversified away by investing in both Hampton Financial and Atrium Mortgage 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 Hampton Financial and Atrium Mortgage into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hampton Financial Corp and Atrium Mortgage Investment, you can compare the effects of market volatilities on Hampton Financial and Atrium Mortgage 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 Hampton Financial with a short position of Atrium Mortgage. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hampton Financial and Atrium Mortgage.
Diversification Opportunities for Hampton Financial and Atrium Mortgage
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Hampton and Atrium is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Hampton Financial Corp and Atrium Mortgage Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Atrium Mortgage Inve and Hampton Financial 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 Hampton Financial Corp are associated (or correlated) with Atrium Mortgage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Atrium Mortgage Inve has no effect on the direction of Hampton Financial i.e., Hampton Financial and Atrium Mortgage go up and down completely randomly.
Pair Corralation between Hampton Financial and Atrium Mortgage
Assuming the 90 days horizon Hampton Financial Corp is expected to generate 3.71 times more return on investment than Atrium Mortgage. However, Hampton Financial is 3.71 times more volatile than Atrium Mortgage Investment. It trades about 0.18 of its potential returns per unit of risk. Atrium Mortgage Investment is currently generating about -0.18 per unit of risk. If you would invest 41.00 in Hampton Financial Corp on October 11, 2024 and sell it today you would earn a total of 4.00 from holding Hampton Financial Corp or generate 9.76% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Hampton Financial Corp vs. Atrium Mortgage Investment
Performance |
Timeline |
Hampton Financial Corp |
Atrium Mortgage Inve |
Hampton Financial and Atrium Mortgage Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Hampton Financial and Atrium Mortgage
The main advantage of trading using opposite Hampton Financial and Atrium Mortgage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hampton Financial position performs unexpectedly, Atrium Mortgage 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 Atrium Mortgage will offset losses from the drop in Atrium Mortgage's long position.Hampton Financial vs. Constellation Software | ||
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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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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