Correlation Between Ladder Capital and Arlington Asset

Can any of the company-specific risk be diversified away by investing in both Ladder Capital and Arlington Asset 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 Ladder Capital and Arlington Asset into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Ladder Capital Corp and Arlington Asset Investment, you can compare the effects of market volatilities on Ladder Capital and Arlington Asset 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 Ladder Capital with a short position of Arlington Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ladder Capital and Arlington Asset.

Diversification Opportunities for Ladder Capital and Arlington Asset

0.0

Correlation Coefficient

Ladder Capital  Arlington Asset

Pay attention - limited upside

The 3 months correlation between Ladder and Arlington is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Ladder Capital Corp and Arlington Asset Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arlington Asset Inve and Ladder Capital 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 Ladder Capital Corp are associated (or correlated) with Arlington Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arlington Asset Inve has no effect on the direction of Ladder Capital i.e., Ladder Capital and Arlington Asset go up and down completely randomly.

Pair Corralation between Ladder Capital and Arlington Asset

If you would invest  1,103  in Ladder Capital Corp on December 29, 2024 and sell it today you would earn a total of  45.00  from holding Ladder Capital Corp or generate 4.08% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Ladder Capital Corp  vs.  Arlington Asset Investment

Ladder Capital Corp

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Ladder Capital Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable fundamental indicators, Ladder Capital is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Arlington Asset Inve

Risk-Adjusted Performance

Very Weak

Over the last 90 days Arlington Asset Investment has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound forward indicators, Arlington Asset is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Ladder Capital and Arlington Asset

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

The idea behind Ladder Capital Corp and Arlington Asset Investment 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.