Correlation Between Armada Hflr and Plumb Balanced

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

Diversification Opportunities for Armada Hflr and Plumb Balanced

-0.36

Correlation Coefficient

Armada Hflr  Plumb Balanced

Very good diversification

The 3 months correlation between Armada and Plumb is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Armada Hflr Pr and Plumb Balanced in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Plumb Balanced 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 Plumb Balanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Plumb Balanced has no effect on the direction of Armada Hflr i.e., Armada Hflr and Plumb Balanced go up and down completely randomly.

Pair Corralation between Armada Hflr and Plumb Balanced

Considering the 90-day investment horizon Armada Hflr Pr is expected to under-perform the Plumb Balanced. In addition to that, Armada Hflr is 2.62 times more volatile than Plumb Balanced. It trades about -0.08 of its total potential returns per unit of risk. Plumb Balanced is currently generating about 0.13 per unit of volatility. If you would invest  3,898  in Plumb Balanced on September 15, 2024 and sell it today you would earn a total of  184.00  from holding Plumb Balanced or generate 4.72% return on investment over 90 days.

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

Armada Hflr Pr  vs.  Plumb Balanced

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.

Plumb Balanced

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Plumb Balanced are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental drivers, Plumb Balanced is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Armada Hflr and Plumb Balanced

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

The idea behind Armada Hflr Pr and Plumb Balanced 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.