Correlation Between Armada Hflr and Realty Income
Can any of the company-specific risk be diversified away by investing in both Armada Hflr and Realty Income 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 Armada Hflr and Realty Income into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Armada Hflr Pr and Realty Income, you can compare the effects of market volatilities on Armada Hflr and Realty Income 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 Armada Hflr with a short position of Realty Income. Check out your portfolio center. Please also check ongoing floating volatility patterns of Armada Hflr and Realty Income.
Diversification Opportunities for Armada Hflr and Realty Income
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Armada and Realty is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Armada Hflr Pr and Realty Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Realty Income and Armada Hflr 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 Armada Hflr Pr are associated (or correlated) with Realty Income. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Realty Income has no effect on the direction of Armada Hflr i.e., Armada Hflr and Realty Income go up and down completely randomly.
Pair Corralation between Armada Hflr and Realty Income
Considering the 90-day investment horizon Armada Hflr Pr is expected to under-perform the Realty Income. In addition to that, Armada Hflr is 1.24 times more volatile than Realty Income. It trades about -0.24 of its total potential returns per unit of risk. Realty Income is currently generating about -0.28 per unit of volatility. If you would invest 5,620 in Realty Income on October 10, 2024 and sell it today you would lose (369.00) from holding Realty Income or give up 6.57% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Armada Hflr Pr vs. Realty Income
Performance |
| Timeline |
| Armada Hflr Pr |
| Realty Income |
Armada Hflr and Realty Income Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Armada Hflr and Realty Income
The main advantage of trading using opposite Armada Hflr and Realty Income positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Armada Hflr position performs unexpectedly, Realty Income 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 Realty Income will offset losses from the drop in Realty Income's long position.| Armada Hflr vs. Boston Properties | Armada Hflr vs. Douglas Emmett | Armada Hflr vs. Kilroy Realty Corp | Armada Hflr vs. Alexandria Real Estate |
| Realty Income vs. Federal Realty Investment | Realty Income vs. Macerich Company | Realty Income vs. National Retail Properties | Realty Income vs. Kimco Realty |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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