Correlation Between One Liberty and Armada Hoffler

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

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

Diversification Opportunities for One Liberty and Armada Hoffler

0.73

Correlation Coefficient

One Liberty  Armada Hoffler

Poor diversification

The 3 months correlation between One and Armada is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding One Liberty Properties 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 One Liberty 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 One Liberty Properties 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 One Liberty i.e., One Liberty and Armada Hoffler go up and down completely randomly.

Pair Corralation between One Liberty and Armada Hoffler

Considering the 90-day investment horizon One Liberty Properties is expected to under-perform the Armada Hoffler. In addition to that, One Liberty is 1.38 times more volatile than Armada Hoffler Properties. It trades about -0.02 of its total potential returns per unit of risk. Armada Hoffler Properties is currently generating about 0.04 per unit of volatility. If you would invest  2,194  in Armada Hoffler Properties on December 28, 2024 and sell it today you would earn a total of  50.00  from holding Armada Hoffler Properties or generate 2.28% return on investment over 90 days.

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

One Liberty Properties  vs.  Armada Hoffler Properties

One Liberty Properties

Risk-Adjusted Performance

Very Weak

Over the last 90 days One Liberty Properties has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable essential indicators, One Liberty is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Armada Hoffler Properties

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Armada Hoffler Properties are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. 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 One Liberty and Armada Hoffler

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

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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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.