Correlation Between Armada Hoffler and Artis REIT

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

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

Diversification Opportunities for Armada Hoffler and Artis REIT

0.83

Correlation Coefficient

Armada Hoffler  Artis REIT

Very poor diversification

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

Pair Corralation between Armada Hoffler and Artis REIT

Assuming the 90 days trading horizon Armada Hoffler is expected to generate 7.95 times less return on investment than Artis REIT. But when comparing it to its historical volatility, Armada Hoffler Properties is 1.05 times less risky than Artis REIT. It trades about 0.01 of its potential returns per unit of risk. Artis REIT is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  527.00  in Artis REIT on September 2, 2024 and sell it today you would earn a total of  27.00  from holding Artis REIT or generate 5.12% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.44%
Values	Daily Returns

Armada Hoffler Properties  vs.  Artis REIT

Armada Hoffler Properties

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Armada Hoffler Properties has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong technical indicators, Armada Hoffler is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Artis REIT

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Artis REIT are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Artis REIT is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Armada Hoffler and Artis REIT

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

The idea behind Armada Hoffler Properties and Artis REIT 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.