Correlation Between Armada Hflr and Safehold

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Can any of the company-specific risk be diversified away by investing in both Armada Hflr and Safehold 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 Safehold 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 Safehold, you can compare the effects of market volatilities on Armada Hflr and Safehold 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 Safehold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Armada Hflr and Safehold.

Diversification Opportunities for Armada Hflr and Safehold

ArmadaSafeholdDiversified AwayArmadaSafeholdDiversified Away100%
0.9
  Correlation Coefficient

Almost no diversification

The 3 months correlation between Armada and Safehold is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Armada Hflr Pr and Safehold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Safehold 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 Safehold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Safehold has no effect on the direction of Armada Hflr i.e., Armada Hflr and Safehold go up and down completely randomly.

Pair Corralation between Armada Hflr and Safehold

Considering the 90-day investment horizon Armada Hflr Pr is expected to under-perform the Safehold. But the stock apears to be less risky and, when comparing its historical volatility, Armada Hflr Pr is 1.66 times less risky than Safehold. The stock trades about -0.22 of its potential returns per unit of risk. The Safehold is currently generating about -0.12 of returns per unit of risk over similar time horizon. If you would invest  2,044  in Safehold on November 26, 2024 and sell it today you would lose (338.00) from holding Safehold or give up 16.54% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy100.0%
ValuesDaily Returns

Armada Hflr Pr  vs.  Safehold

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -20-15-10-505
JavaScript chart by amCharts 3.21.15AHH SAFE
       Timeline  
Armada Hflr Pr 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Armada Hflr Pr has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's technical indicators remain fairly strong which may send shares a bit higher in March 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb99.51010.511
Safehold 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Safehold has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in March 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb161718192021

Armada Hflr and Safehold Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-2.49-1.93-1.37-0.81-0.240.280.831.381.932.48 0.050.100.150.20
JavaScript chart by amCharts 3.21.15AHH SAFE
       Returns  

Pair Trading with Armada Hflr and Safehold

The main advantage of trading using opposite Armada Hflr and Safehold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Armada Hflr position performs unexpectedly, Safehold 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 Safehold will offset losses from the drop in Safehold's long position.
The idea behind Armada Hflr Pr and Safehold 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.

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