Correlation Between American Assets and Hannon Armstrong

Can any of the company-specific risk be diversified away by investing in both American Assets and Hannon Armstrong 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 American Assets and Hannon Armstrong into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between American Assets Trust and Hannon Armstrong Sustainable, you can compare the effects of market volatilities on American Assets and Hannon Armstrong 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 American Assets with a short position of Hannon Armstrong. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Assets and Hannon Armstrong.

Diversification Opportunities for American Assets and Hannon Armstrong

-0.1

Correlation Coefficient

American Assets  Hannon Armstrong

Good diversification

The 3 months correlation between American and Hannon is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding American Assets Trust and Hannon Armstrong Sustainable in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hannon Armstrong Sus and American Assets 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 American Assets Trust are associated (or correlated) with Hannon Armstrong. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hannon Armstrong Sus has no effect on the direction of American Assets i.e., American Assets and Hannon Armstrong go up and down completely randomly.

Pair Corralation between American Assets and Hannon Armstrong

Considering the 90-day investment horizon American Assets Trust is expected to generate 0.69 times more return on investment than Hannon Armstrong. However, American Assets Trust is 1.45 times less risky than Hannon Armstrong. It trades about -0.23 of its potential returns per unit of risk. Hannon Armstrong Sustainable is currently generating about -0.19 per unit of risk. If you would invest  2,833  in American Assets Trust on September 27, 2024 and sell it today you would lose (208.00) from holding American Assets Trust or give up 7.34% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

American Assets Trust  vs.  Hannon Armstrong Sustainable

American Assets Trust

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days American Assets Trust has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, American Assets is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Hannon Armstrong Sus

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hannon Armstrong Sustainable has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with American Assets and Hannon Armstrong

The main advantage of trading using opposite American Assets and Hannon Armstrong positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Assets position performs unexpectedly, Hannon Armstrong 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 Hannon Armstrong will offset losses from the drop in Hannon Armstrong's long position.

The idea behind American Assets Trust and Hannon Armstrong Sustainable 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.

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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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.