Correlation Between Modiv and Armada Hflr

Can any of the company-specific risk be diversified away by investing in both Modiv and Armada Hflr 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 Modiv and Armada Hflr into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Modiv Inc and Armada Hflr Pr, you can compare the effects of market volatilities on Modiv and Armada Hflr 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 Modiv with a short position of Armada Hflr. Check out your portfolio center. Please also check ongoing floating volatility patterns of Modiv and Armada Hflr.

Diversification Opportunities for Modiv and Armada Hflr

-0.22

Correlation Coefficient

Modiv  Armada Hflr

Very good diversification

The 3 months correlation between Modiv and Armada is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Modiv Inc and Armada Hflr Pr in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Armada Hflr Pr and Modiv 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 Modiv Inc are associated (or correlated) with Armada Hflr. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Armada Hflr Pr has no effect on the direction of Modiv i.e., Modiv and Armada Hflr go up and down completely randomly.

Pair Corralation between Modiv and Armada Hflr

Considering the 90-day investment horizon Modiv Inc is expected to generate 1.57 times more return on investment than Armada Hflr. However, Modiv is 1.57 times more volatile than Armada Hflr Pr. It trades about 0.05 of its potential returns per unit of risk. Armada Hflr Pr is currently generating about 0.02 per unit of risk. If you would invest  1,055  in Modiv Inc on August 30, 2024 and sell it today you would earn a total of  545.00  from holding Modiv Inc or generate 51.66% return on investment over 90 days.

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

Modiv Inc  vs.  Armada Hflr Pr

Modiv Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Modiv Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable fundamental indicators, Modiv is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

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.

Pair Trading with Modiv and Armada Hflr

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

The idea behind Modiv Inc and Armada Hflr Pr 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.