Correlation Between Necessity Retail and Armada Hoffler

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

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

Diversification Opportunities for Necessity Retail and Armada Hoffler

0.0

Correlation Coefficient

Necessity Retail  Armada Hoffler

Pay attention - limited upside

The 3 months correlation between Necessity and Armada is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Necessity Retail REIT 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 Necessity Retail 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 Necessity Retail REIT 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 Necessity Retail i.e., Necessity Retail and Armada Hoffler go up and down completely randomly.

Pair Corralation between Necessity Retail and Armada Hoffler

If you would invest  2,248  in Armada Hoffler Properties on December 22, 2024 and sell it today you would lose (4.00) from holding Armada Hoffler Properties or give up 0.18% of portfolio value over 90 days.

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

Necessity Retail REIT  vs.  Armada Hoffler Properties

Necessity Retail REIT

Risk-Adjusted Performance

Very Weak

Over the last 90 days Necessity Retail REIT has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Necessity Retail is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Armada Hoffler Properties

Risk-Adjusted Performance

Very Weak

Over the last 90 days Armada Hoffler Properties has generated negative risk-adjusted returns adding no value to investors with long positions. 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 Necessity Retail and Armada Hoffler

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

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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.