Correlation Between NYSE Composite and Arbor Realty
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Arbor Realty 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 NYSE Composite and Arbor Realty into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Arbor Realty Trust, you can compare the effects of market volatilities on NYSE Composite and Arbor Realty 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 NYSE Composite with a short position of Arbor Realty. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Arbor Realty.
Diversification Opportunities for NYSE Composite and Arbor Realty
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between NYSE and Arbor is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Arbor Realty Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arbor Realty Trust and NYSE Composite 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 NYSE Composite are associated (or correlated) with Arbor Realty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arbor Realty Trust has no effect on the direction of NYSE Composite i.e., NYSE Composite and Arbor Realty go up and down completely randomly.
Pair Corralation between NYSE Composite and Arbor Realty
Assuming the 90 days trading horizon NYSE Composite is expected to generate 0.53 times more return on investment than Arbor Realty. However, NYSE Composite is 1.88 times less risky than Arbor Realty. It trades about 0.08 of its potential returns per unit of risk. Arbor Realty Trust is currently generating about 0.03 per unit of risk. If you would invest 1,551,444 in NYSE Composite on August 31, 2024 and sell it today you would earn a total of 475,760 from holding NYSE Composite or generate 30.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.79% |
| Values | Daily Returns |
NYSE Composite vs. Arbor Realty Trust
Performance |
| Timeline |
NYSE Composite and Arbor Realty Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Arbor Realty Trust
Pair trading matchups for Arbor Realty
Pair Trading with NYSE Composite and Arbor Realty
The main advantage of trading using opposite NYSE Composite and Arbor Realty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Arbor Realty 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 Arbor Realty will offset losses from the drop in Arbor Realty's long position.| NYSE Composite vs. Nextplat Corp | NYSE Composite vs. Qualys Inc | NYSE Composite vs. Cadence Design Systems | NYSE Composite vs. Asure Software |
| Arbor Realty vs. Arbor Realty Trust | Arbor Realty vs. Arbor Realty Trust | Arbor Realty vs. ACRES Commercial Realty | Arbor Realty vs. ARMOUR Residential REIT |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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