Correlation Between Armada Hflr and Auto Trader

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

Diversification Opportunities for Armada Hflr and Auto Trader

0.45

Correlation Coefficient

Armada Hflr  Auto Trader

Very weak diversification

The 3 months correlation between Armada and Auto is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Armada Hflr Pr and Auto Trader Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Auto Trader Group 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 Auto Trader. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Auto Trader Group has no effect on the direction of Armada Hflr i.e., Armada Hflr and Auto Trader go up and down completely randomly.

Pair Corralation between Armada Hflr and Auto Trader

Considering the 90-day investment horizon Armada Hflr Pr is expected to under-perform the Auto Trader. In addition to that, Armada Hflr is 1.01 times more volatile than Auto Trader Group. It trades about 0.0 of its total potential returns per unit of risk. Auto Trader Group is currently generating about 0.05 per unit of volatility. If you would invest  183.00  in Auto Trader Group on September 26, 2024 and sell it today you would earn a total of  68.00  from holding Auto Trader Group or generate 37.16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.79%
Values	Daily Returns

Armada Hflr Pr  vs.  Auto Trader Group

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.

Auto Trader Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Auto Trader Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile 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 current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Armada Hflr and Auto Trader

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

The idea behind Armada Hflr Pr and Auto Trader Group 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.