Correlation Between Arbor Realty and Maxus Realty
Can any of the company-specific risk be diversified away by investing in both Arbor Realty and Maxus 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 Arbor Realty and Maxus Realty into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Arbor Realty Trust and Maxus Realty Trust, you can compare the effects of market volatilities on Arbor Realty and Maxus 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 Arbor Realty with a short position of Maxus Realty. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arbor Realty and Maxus Realty.
Diversification Opportunities for Arbor Realty and Maxus Realty
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Arbor and Maxus is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Arbor Realty Trust and Maxus Realty Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Maxus Realty Trust and Arbor Realty 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 Arbor Realty Trust are associated (or correlated) with Maxus Realty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Maxus Realty Trust has no effect on the direction of Arbor Realty i.e., Arbor Realty and Maxus Realty go up and down completely randomly.
Pair Corralation between Arbor Realty and Maxus Realty
Assuming the 90 days trading horizon Arbor Realty is expected to generate 2.22 times less return on investment than Maxus Realty. But when comparing it to its historical volatility, Arbor Realty Trust is 5.07 times less risky than Maxus Realty. It trades about 0.04 of its potential returns per unit of risk. Maxus Realty Trust is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 13,659 in Maxus Realty Trust on August 27, 2024 and sell it today you would lose (1,659) from holding Maxus Realty Trust or give up 12.15% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 31.85% |
| Values | Daily Returns |
Arbor Realty Trust vs. Maxus Realty Trust
Performance |
| Timeline |
| Arbor Realty Trust |
| Maxus Realty Trust |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Arbor Realty and Maxus Realty Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Arbor Realty and Maxus Realty
The main advantage of trading using opposite Arbor Realty and Maxus Realty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arbor Realty position performs unexpectedly, Maxus 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 Maxus Realty will offset losses from the drop in Maxus Realty's long position.| Arbor Realty vs. New York Mortgage | Arbor Realty vs. New York Mortgage | Arbor Realty vs. Two Harbors Investment | Arbor Realty vs. Two Harbors 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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