Correlation Between Armada Hflr and IFabric Corp

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

Diversification Opportunities for Armada Hflr and IFabric Corp

0.23

Correlation Coefficient

Armada Hflr  IFabric Corp

Modest diversification

The 3 months correlation between Armada and IFabric is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Armada Hflr Pr and iFabric Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iFabric Corp 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 IFabric Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iFabric Corp has no effect on the direction of Armada Hflr i.e., Armada Hflr and IFabric Corp go up and down completely randomly.

Pair Corralation between Armada Hflr and IFabric Corp

Considering the 90-day investment horizon Armada Hflr Pr is expected to under-perform the IFabric Corp. But the stock apears to be less risky and, when comparing its historical volatility, Armada Hflr Pr is 2.18 times less risky than IFabric Corp. The stock trades about -0.33 of its potential returns per unit of risk. The iFabric Corp is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  108.00  in iFabric Corp on September 27, 2024 and sell it today you would lose (3.00) from holding iFabric Corp or give up 2.78% of portfolio value over 90 days.

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

Armada Hflr Pr  vs.  iFabric Corp

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.

iFabric Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days iFabric Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, IFabric Corp is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Armada Hflr and IFabric Corp

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

The idea behind Armada Hflr Pr and iFabric Corp 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 Anywhere module to track or share privately all of your investments from the convenience of any device.