Correlation Between Armada Hoffler and Modiv

Can any of the company-specific risk be diversified away by investing in both Armada Hoffler and Modiv 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 Modiv 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 Modiv Inc, you can compare the effects of market volatilities on Armada Hoffler and Modiv 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 Modiv. Check out your portfolio center. Please also check ongoing floating volatility patterns of Armada Hoffler and Modiv.

Diversification Opportunities for Armada Hoffler and Modiv

0.39

Correlation Coefficient

Armada Hoffler  Modiv

Weak diversification

The 3 months correlation between Armada and Modiv is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Armada Hoffler Properties and Modiv Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Modiv Inc 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 Modiv. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Modiv Inc has no effect on the direction of Armada Hoffler i.e., Armada Hoffler and Modiv go up and down completely randomly.

Pair Corralation between Armada Hoffler and Modiv

Assuming the 90 days trading horizon Armada Hoffler is expected to generate 7.71 times less return on investment than Modiv. But when comparing it to its historical volatility, Armada Hoffler Properties is 1.62 times less risky than Modiv. It trades about 0.01 of its potential returns per unit of risk. Modiv Inc is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  1,533  in Modiv Inc on September 2, 2024 and sell it today you would earn a total of  69.00  from holding Modiv Inc or generate 4.5% return on investment over 90 days.

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

Armada Hoffler Properties  vs.  Modiv Inc

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.

Modiv Inc

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Modiv Inc are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable fundamental indicators, Modiv is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Armada Hoffler and Modiv

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

The idea behind Armada Hoffler Properties and Modiv Inc 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..