Correlation Between SiriusPoint and ARMOUR Residential
Can any of the company-specific risk be diversified away by investing in both SiriusPoint 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 SiriusPoint and ARMOUR Residential into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SiriusPoint and ARMOUR Residential REIT, you can compare the effects of market volatilities on SiriusPoint 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 SiriusPoint with a short position of ARMOUR Residential. Check out your portfolio center. Please also check ongoing floating volatility patterns of SiriusPoint and ARMOUR Residential.
Diversification Opportunities for SiriusPoint and ARMOUR Residential
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between SiriusPoint and ARMOUR is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding SiriusPoint 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 SiriusPoint 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 SiriusPoint 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 SiriusPoint i.e., SiriusPoint and ARMOUR Residential go up and down completely randomly.
Pair Corralation between SiriusPoint and ARMOUR Residential
Assuming the 90 days trading horizon SiriusPoint is expected to generate 1.44 times less return on investment than ARMOUR Residential. But when comparing it to its historical volatility, SiriusPoint is 1.86 times less risky than ARMOUR Residential. It trades about 0.1 of its potential returns per unit of risk. ARMOUR Residential REIT is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 1,772 in ARMOUR Residential REIT on August 27, 2024 and sell it today you would earn a total of 483.00 from holding ARMOUR Residential REIT or generate 27.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SiriusPoint vs. ARMOUR Residential REIT
Performance |
| Timeline |
| SiriusPoint |
| ARMOUR Residential REIT |
SiriusPoint and ARMOUR Residential Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SiriusPoint and ARMOUR Residential
The main advantage of trading using opposite SiriusPoint and ARMOUR Residential positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SiriusPoint 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.| SiriusPoint vs. RLJ Lodging Trust | SiriusPoint vs. Argo Group International | SiriusPoint vs. New York Mortgage | SiriusPoint vs. Aquagold International |
| ARMOUR Residential vs. Annaly Capital Management | ARMOUR Residential vs. AGNC Investment Corp | ARMOUR Residential vs. Invesco Mortgage Capital | ARMOUR Residential vs. Invesco Mortgage Capital |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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