Correlation Between Armada Hflr and A O

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

Diversification Opportunities for Armada Hflr and A O

-0.22

Correlation Coefficient

Armada Hflr  A O

Very good diversification

The 3 months correlation between Armada and AOS is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Armada Hflr Pr and A O Smith in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on A O Smith 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 A O. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of A O Smith has no effect on the direction of Armada Hflr i.e., Armada Hflr and A O go up and down completely randomly.

Pair Corralation between Armada Hflr and A O

Considering the 90-day investment horizon Armada Hflr Pr is expected to under-perform the A O. In addition to that, Armada Hflr is 417.69 times more volatile than A O Smith. It trades about -0.02 of its total potential returns per unit of risk. A O Smith is currently generating about 0.11 per unit of volatility. If you would invest  119,134  in A O Smith on September 29, 2024 and sell it today you would earn a total of  66.00  from holding A O Smith or generate 0.06% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.21%
Values	Daily Returns

Armada Hflr Pr  vs.  A O Smith

Armada Hflr Pr

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Armada Hflr Pr has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong technical indicators, Armada Hflr is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

A O Smith

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in A O Smith are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, A O is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Armada Hflr and A O

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

The idea behind Armada Hflr Pr and A O Smith 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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.