Correlation Between Armada Hflr and Greenlane Renewables

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

Diversification Opportunities for Armada Hflr and Greenlane Renewables

-0.21

Correlation Coefficient

Armada Hflr  Greenlane Renewables

Very good diversification

The 3 months correlation between Armada and Greenlane is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Armada Hflr Pr and Greenlane Renewables in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Greenlane Renewables 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 Greenlane Renewables. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Greenlane Renewables has no effect on the direction of Armada Hflr i.e., Armada Hflr and Greenlane Renewables go up and down completely randomly.

Pair Corralation between Armada Hflr and Greenlane Renewables

Considering the 90-day investment horizon Armada Hflr Pr is expected to generate 0.09 times more return on investment than Greenlane Renewables. However, Armada Hflr Pr is 11.12 times less risky than Greenlane Renewables. It trades about -0.04 of its potential returns per unit of risk. Greenlane Renewables is currently generating about -0.09 per unit of risk. If you would invest  1,107  in Armada Hflr Pr on September 17, 2024 and sell it today you would lose (8.00) from holding Armada Hflr Pr or give up 0.72% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Armada Hflr Pr  vs.  Greenlane Renewables

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 weak 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.

Greenlane Renewables

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Greenlane Renewables are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, Greenlane Renewables displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Armada Hflr and Greenlane Renewables

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

The idea behind Armada Hflr Pr and Greenlane Renewables 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.

Check out your portfolio center.

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 Anywhere module to track or share privately all of your investments from the convenience of any device.