Correlation Between Ventas and Armada Hflr

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

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

Diversification Opportunities for Ventas and Armada Hflr

0.75

Correlation Coefficient

Ventas  Armada Hflr

Poor diversification

The 3 months correlation between Ventas and Armada is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Ventas Inc and Armada Hflr Pr in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Armada Hflr Pr and Ventas 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 Ventas Inc are associated (or correlated) with Armada Hflr. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Armada Hflr Pr has no effect on the direction of Ventas i.e., Ventas and Armada Hflr go up and down completely randomly.

Pair Corralation between Ventas and Armada Hflr

Considering the 90-day investment horizon Ventas Inc is expected to under-perform the Armada Hflr. But the stock apears to be less risky and, when comparing its historical volatility, Ventas Inc is 1.27 times less risky than Armada Hflr. The stock trades about -0.24 of its potential returns per unit of risk. The Armada Hflr Pr is currently generating about -0.19 of returns per unit of risk over similar time horizon. If you would invest  1,078  in Armada Hflr Pr on October 5, 2024 and sell it today you would lose (58.00) from holding Armada Hflr Pr or give up 5.38% of portfolio value over 90 days.

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

Ventas Inc  vs.  Armada Hflr Pr

Ventas Inc

Risk-Adjusted Performance

0 of 100

Very Weak

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

Armada Hflr Pr

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Armada Hflr Pr has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong technical indicators, Armada Hflr is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Ventas and Armada Hflr

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

The idea behind Ventas Inc and Armada Hflr Pr 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .