Correlation Between Armada Hflr and IncomeShares SP500

Can any of the company-specific risk be diversified away by investing in both Armada Hflr and IncomeShares SP500 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 IncomeShares SP500 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 IncomeShares SP500 Options, you can compare the effects of market volatilities on Armada Hflr and IncomeShares SP500 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 IncomeShares SP500. Check out your portfolio center. Please also check ongoing floating volatility patterns of Armada Hflr and IncomeShares SP500.

Diversification Opportunities for Armada Hflr and IncomeShares SP500

0.14

Correlation Coefficient

Armada Hflr  IncomeShares SP500

Average diversification

The 3 months correlation between Armada and IncomeShares is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Armada Hflr Pr and IncomeShares SP500 Options in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IncomeShares SP500 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 IncomeShares SP500. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IncomeShares SP500 has no effect on the direction of Armada Hflr i.e., Armada Hflr and IncomeShares SP500 go up and down completely randomly.

Pair Corralation between Armada Hflr and IncomeShares SP500

Considering the 90-day investment horizon Armada Hflr Pr is expected to under-perform the IncomeShares SP500. In addition to that, Armada Hflr is 1.96 times more volatile than IncomeShares SP500 Options. It trades about -0.33 of its total potential returns per unit of risk. IncomeShares SP500 Options is currently generating about -0.05 per unit of volatility. If you would invest  908.00  in IncomeShares SP500 Options on September 28, 2024 and sell it today you would lose (7.00) from holding IncomeShares SP500 Options or give up 0.77% of portfolio value over 90 days.

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

Armada Hflr Pr  vs.  IncomeShares SP500 Options

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 latest unfluctuating performance, the Stock's technical indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

IncomeShares SP500

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in IncomeShares SP500 Options are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, IncomeShares SP500 is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Armada Hflr and IncomeShares SP500

The main advantage of trading using opposite Armada Hflr and IncomeShares SP500 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Armada Hflr position performs unexpectedly, IncomeShares SP500 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 IncomeShares SP500 will offset losses from the drop in IncomeShares SP500's long position.

The idea behind Armada Hflr Pr and IncomeShares SP500 Options 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.