Correlation Between Armada Hflr and Inventrust Properties

Can any of the company-specific risk be diversified away by investing in both Armada Hflr and Inventrust Properties 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 Armada Hflr and Inventrust Properties into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Armada Hflr Pr and Inventrust Properties Corp, you can compare the effects of market volatilities on Armada Hflr and Inventrust Properties 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 Armada Hflr with a short position of Inventrust Properties. Check out your portfolio center. Please also check ongoing floating volatility patterns of Armada Hflr and Inventrust Properties.

Diversification Opportunities for Armada Hflr and Inventrust Properties

0.83

Correlation Coefficient

Armada Hflr  Inventrust Properties

Very poor diversification

The 3 months correlation between Armada and Inventrust is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Armada Hflr Pr and Inventrust Properties Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inventrust Properties and Armada Hflr 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 Armada Hflr Pr are associated (or correlated) with Inventrust Properties. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inventrust Properties has no effect on the direction of Armada Hflr i.e., Armada Hflr and Inventrust Properties go up and down completely randomly.

Pair Corralation between Armada Hflr and Inventrust Properties

Considering the 90-day investment horizon Armada Hflr is expected to generate 1.38 times less return on investment than Inventrust Properties. In addition to that, Armada Hflr is 1.06 times more volatile than Inventrust Properties Corp. It trades about 0.04 of its total potential returns per unit of risk. Inventrust Properties Corp is currently generating about 0.06 per unit of volatility. If you would invest  2,029  in Inventrust Properties Corp on June 23, 2024 and sell it today you would earn a total of  913.00  from holding Inventrust Properties Corp or generate 45.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

Armada Hflr Pr  vs.  Inventrust Properties Corp

Armada Hflr Pr

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Armada Hflr Pr are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak technical indicators, Armada Hflr may actually be approaching a critical reversion point that can send shares even higher in October 2024.

Inventrust Properties

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Inventrust Properties Corp are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Inventrust Properties unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Armada Hflr and Inventrust Properties

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

The idea behind Armada Hflr Pr and Inventrust Properties Corp 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.