Correlation Between Joint Stock and Arbor Realty

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

By analyzing existing cross correlation between Joint Stock and Arbor Realty Trust, you can compare the effects of market volatilities on Joint Stock and Arbor Realty 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 Joint Stock with a short position of Arbor Realty. Check out your portfolio center. Please also check ongoing floating volatility patterns of Joint Stock and Arbor Realty.

Diversification Opportunities for Joint Stock and Arbor Realty

0.76

Correlation Coefficient

Joint Stock  Arbor Realty

Poor diversification

The 3 months correlation between Joint and Arbor is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Joint Stock and Arbor Realty Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arbor Realty Trust and Joint Stock 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 Joint Stock are associated (or correlated) with Arbor Realty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arbor Realty Trust has no effect on the direction of Joint Stock i.e., Joint Stock and Arbor Realty go up and down completely randomly.

Pair Corralation between Joint Stock and Arbor Realty

Given the investment horizon of 90 days Joint Stock is expected to generate 1.12 times more return on investment than Arbor Realty. However, Joint Stock is 1.12 times more volatile than Arbor Realty Trust. It trades about 0.05 of its potential returns per unit of risk. Arbor Realty Trust is currently generating about 0.03 per unit of risk. If you would invest  6,562  in Joint Stock on October 11, 2024 and sell it today you would earn a total of  3,008  from holding Joint Stock or generate 45.84% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	67.47%
Values	Daily Returns

Joint Stock  vs.  Arbor Realty Trust

Joint Stock

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Joint Stock has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Arbor Realty Trust

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Arbor Realty Trust has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Stock's fundamental drivers remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with Joint Stock and Arbor Realty

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

The idea behind Joint Stock and Arbor Realty Trust 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.