Correlation Between Armada Hflr and SPDR Galaxy
Can any of the company-specific risk be diversified away by investing in both Armada Hflr and SPDR Galaxy 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 SPDR Galaxy 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 SPDR Galaxy Transformative, you can compare the effects of market volatilities on Armada Hflr and SPDR Galaxy 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 SPDR Galaxy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Armada Hflr and SPDR Galaxy.
Diversification Opportunities for Armada Hflr and SPDR Galaxy
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Armada and SPDR is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Armada Hflr Pr and SPDR Galaxy Transformative in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR Galaxy Transfor 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 SPDR Galaxy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR Galaxy Transfor has no effect on the direction of Armada Hflr i.e., Armada Hflr and SPDR Galaxy go up and down completely randomly.
Pair Corralation between Armada Hflr and SPDR Galaxy
Considering the 90-day investment horizon Armada Hflr Pr is expected to under-perform the SPDR Galaxy. But the stock apears to be less risky and, when comparing its historical volatility, Armada Hflr Pr is 3.06 times less risky than SPDR Galaxy. The stock trades about -0.13 of its potential returns per unit of risk. The SPDR Galaxy Transformative is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 3,325 in SPDR Galaxy Transformative on September 18, 2024 and sell it today you would earn a total of 152.00 from holding SPDR Galaxy Transformative or generate 4.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Armada Hflr Pr vs. SPDR Galaxy Transformative
Performance |
| Timeline |
| Armada Hflr Pr |
| SPDR Galaxy Transfor |
Armada Hflr and SPDR Galaxy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Armada Hflr and SPDR Galaxy
The main advantage of trading using opposite Armada Hflr and SPDR Galaxy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Armada Hflr position performs unexpectedly, SPDR Galaxy 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 SPDR Galaxy will offset losses from the drop in SPDR Galaxy's long position.The idea behind Armada Hflr Pr and SPDR Galaxy Transformative 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.| SPDR Galaxy vs. Invesco DWA Utilities | SPDR Galaxy vs. Invesco Dynamic Large | SPDR Galaxy vs. SCOR PK | SPDR Galaxy vs. Morningstar Unconstrained Allocation |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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