Correlation Between P10 and Arbor Realty

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Can any of the company-specific risk be diversified away by investing in both P10 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 P10 and Arbor Realty into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between P10 Inc and Arbor Realty Trust, you can compare the effects of market volatilities on P10 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 P10 with a short position of Arbor Realty. Check out your portfolio center. Please also check ongoing floating volatility patterns of P10 and Arbor Realty.

Diversification Opportunities for P10 and Arbor Realty

-0.47
  Correlation Coefficient

Very good diversification

The 3 months correlation between P10 and Arbor is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding P10 Inc 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 P10 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 P10 Inc 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 P10 i.e., P10 and Arbor Realty go up and down completely randomly.

Pair Corralation between P10 and Arbor Realty

Allowing for the 90-day total investment horizon P10 Inc is expected to generate 0.95 times more return on investment than Arbor Realty. However, P10 Inc is 1.05 times less risky than Arbor Realty. It trades about 0.07 of its potential returns per unit of risk. Arbor Realty Trust is currently generating about 0.0 per unit of risk. If you would invest  993.00  in P10 Inc on September 20, 2024 and sell it today you would earn a total of  356.00  from holding P10 Inc or generate 35.85% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

P10 Inc  vs.  Arbor Realty Trust

 Performance 
       Timeline  
P10 Inc 

Risk-Adjusted Performance

16 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in P10 Inc are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, P10 showed solid returns over the last few months and may actually be approaching a breakup point.
Arbor Realty Trust 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
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 relatively invariable fundamental drivers, Arbor Realty is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

P10 and Arbor Realty Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with P10 and Arbor Realty

The main advantage of trading using opposite P10 and Arbor Realty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if P10 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 P10 Inc 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.
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.

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