Correlation Between Arbor Realty and FS Credit
Can any of the company-specific risk be diversified away by investing in both Arbor Realty and FS Credit 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 FS Credit 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 FS Credit Opportunities, you can compare the effects of market volatilities on Arbor Realty and FS Credit 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 FS Credit. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arbor Realty and FS Credit.
Diversification Opportunities for Arbor Realty and FS Credit
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Arbor and FSCO is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Arbor Realty Trust and FS Credit Opportunities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FS Credit Opportunities 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 FS Credit. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FS Credit Opportunities has no effect on the direction of Arbor Realty i.e., Arbor Realty and FS Credit go up and down completely randomly.
Pair Corralation between Arbor Realty and FS Credit
Considering the 90-day investment horizon Arbor Realty Trust is expected to under-perform the FS Credit. In addition to that, Arbor Realty is 1.29 times more volatile than FS Credit Opportunities. It trades about -0.16 of its total potential returns per unit of risk. FS Credit Opportunities is currently generating about 0.07 per unit of volatility. If you would invest 665.00 in FS Credit Opportunities on October 9, 2024 and sell it today you would earn a total of 8.00 from holding FS Credit Opportunities or generate 1.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.0% |
| Values | Daily Returns |
Arbor Realty Trust vs. FS Credit Opportunities
Performance |
| Timeline |
| Arbor Realty Trust |
| FS Credit Opportunities |
Arbor Realty and FS Credit Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Arbor Realty and FS Credit
The main advantage of trading using opposite Arbor Realty and FS Credit positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arbor Realty position performs unexpectedly, FS Credit 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 FS Credit will offset losses from the drop in FS Credit's long position.| Arbor Realty vs. Starwood Property Trust | Arbor Realty vs. Ready Capital Corp | Arbor Realty vs. Two Harbors Investments | Arbor Realty vs. AGNC Investment Corp |
| FS Credit vs. MFS Investment Grade | FS Credit vs. Eaton Vance National | FS Credit vs. Federated Premier Municipal | FS Credit vs. Brightsphere Investment Group |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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