Correlation Between ARMOUR Residential and Global Ship
Can any of the company-specific risk be diversified away by investing in both ARMOUR Residential and Global Ship 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 ARMOUR Residential and Global Ship into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ARMOUR Residential REIT and Global Ship Lease, you can compare the effects of market volatilities on ARMOUR Residential and Global Ship 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 ARMOUR Residential with a short position of Global Ship. Check out your portfolio center. Please also check ongoing floating volatility patterns of ARMOUR Residential and Global Ship.
Diversification Opportunities for ARMOUR Residential and Global Ship
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ARMOUR and Global is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding ARMOUR Residential REIT and Global Ship Lease in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Ship Lease and ARMOUR Residential 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 ARMOUR Residential REIT are associated (or correlated) with Global Ship. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Ship Lease has no effect on the direction of ARMOUR Residential i.e., ARMOUR Residential and Global Ship go up and down completely randomly.
Pair Corralation between ARMOUR Residential and Global Ship
Assuming the 90 days trading horizon ARMOUR Residential REIT is expected to under-perform the Global Ship. In addition to that, ARMOUR Residential is 1.22 times more volatile than Global Ship Lease. It trades about -0.14 of its total potential returns per unit of risk. Global Ship Lease is currently generating about 0.02 per unit of volatility. If you would invest 2,623 in Global Ship Lease on August 28, 2024 and sell it today you would earn a total of 7.00 from holding Global Ship Lease or generate 0.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ARMOUR Residential REIT vs. Global Ship Lease
Performance |
| Timeline |
| ARMOUR Residential REIT |
| Global Ship Lease |
ARMOUR Residential and Global Ship Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ARMOUR Residential and Global Ship
The main advantage of trading using opposite ARMOUR Residential and Global Ship positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ARMOUR Residential position performs unexpectedly, Global Ship 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 Global Ship will offset losses from the drop in Global Ship's long position.| ARMOUR Residential vs. Annaly Capital Management | ARMOUR Residential vs. Invesco Mortgage Capital | ARMOUR Residential vs. Invesco Mortgage Capital | ARMOUR Residential vs. Chimera Investment |
| Global Ship vs. Safe Bulkers | Global Ship vs. Diana Shipping | Global Ship vs. Costamare | Global Ship vs. Safe Bulkers |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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