Correlation Between Blackstone Mortgage and ARMOUR Residential
Can any of the company-specific risk be diversified away by investing in both Blackstone Mortgage and ARMOUR Residential 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 Blackstone Mortgage and ARMOUR Residential into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Blackstone Mortgage Trust and ARMOUR Residential REIT, you can compare the effects of market volatilities on Blackstone Mortgage and ARMOUR Residential 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 Blackstone Mortgage with a short position of ARMOUR Residential. Check out your portfolio center. Please also check ongoing floating volatility patterns of Blackstone Mortgage and ARMOUR Residential.
Diversification Opportunities for Blackstone Mortgage and ARMOUR Residential
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Blackstone and ARMOUR is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Blackstone Mortgage Trust and ARMOUR Residential REIT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ARMOUR Residential REIT and Blackstone Mortgage 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 Blackstone Mortgage Trust are associated (or correlated) with ARMOUR Residential. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ARMOUR Residential REIT has no effect on the direction of Blackstone Mortgage i.e., Blackstone Mortgage and ARMOUR Residential go up and down completely randomly.
Pair Corralation between Blackstone Mortgage and ARMOUR Residential
Given the investment horizon of 90 days Blackstone Mortgage Trust is expected to generate 1.53 times more return on investment than ARMOUR Residential. However, Blackstone Mortgage is 1.53 times more volatile than ARMOUR Residential REIT. It trades about 0.12 of its potential returns per unit of risk. ARMOUR Residential REIT is currently generating about 0.01 per unit of risk. If you would invest 1,851 in Blackstone Mortgage Trust on August 30, 2024 and sell it today you would earn a total of 73.00 from holding Blackstone Mortgage Trust or generate 3.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Blackstone Mortgage Trust vs. ARMOUR Residential REIT
Performance |
| Timeline |
| Blackstone Mortgage Trust |
| ARMOUR Residential REIT |
Blackstone Mortgage and ARMOUR Residential Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Blackstone Mortgage and ARMOUR Residential
The main advantage of trading using opposite Blackstone Mortgage and ARMOUR Residential positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Blackstone Mortgage position performs unexpectedly, ARMOUR Residential 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 ARMOUR Residential will offset losses from the drop in ARMOUR Residential's long position.| Blackstone Mortgage vs. Starwood Property Trust | Blackstone Mortgage vs. Rithm Capital Corp | Blackstone Mortgage vs. AGNC Investment Corp | Blackstone Mortgage vs. Ares Commercial Real |
| ARMOUR Residential vs. Ellington Residential Mortgage | ARMOUR Residential vs. Orchid Island Capital | ARMOUR Residential vs. Ellington Financial | ARMOUR Residential vs. Ares Commercial Real |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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