Correlation Between Equity Lifestyle and ARMOUR Residential
Can any of the company-specific risk be diversified away by investing in both Equity Lifestyle and ARMOUR Residential 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 Equity Lifestyle and ARMOUR Residential into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Equity Lifestyle Properties and ARMOUR Residential REIT, you can compare the effects of market volatilities on Equity Lifestyle and ARMOUR Residential 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 Equity Lifestyle with a short position of ARMOUR Residential. Check out your portfolio center. Please also check ongoing floating volatility patterns of Equity Lifestyle and ARMOUR Residential.
Diversification Opportunities for Equity Lifestyle and ARMOUR Residential
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between Equity and ARMOUR is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Equity Lifestyle Properties and ARMOUR Residential REIT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ARMOUR Residential REIT and Equity Lifestyle 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 Equity Lifestyle Properties are associated (or correlated) with ARMOUR Residential. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ARMOUR Residential REIT has no effect on the direction of Equity Lifestyle i.e., Equity Lifestyle and ARMOUR Residential go up and down completely randomly.
Pair Corralation between Equity Lifestyle and ARMOUR Residential
Considering the 90-day investment horizon Equity Lifestyle Properties is expected to under-perform the ARMOUR Residential. But the stock apears to be less risky and, when comparing its historical volatility, Equity Lifestyle Properties is 1.7 times less risky than ARMOUR Residential. The stock trades about -0.15 of its potential returns per unit of risk. The ARMOUR Residential REIT is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest 1,865 in ARMOUR Residential REIT on January 17, 2024 and sell it today you would lose (83.00) from holding ARMOUR Residential REIT or give up 4.45% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Equity Lifestyle Properties vs. ARMOUR Residential REIT
Performance |
| Timeline |
| Equity Lifestyle Pro |
| ARMOUR Residential REIT |
Equity Lifestyle and ARMOUR Residential Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Equity Lifestyle and ARMOUR Residential
The main advantage of trading using opposite Equity Lifestyle and ARMOUR Residential positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Equity Lifestyle position performs unexpectedly, ARMOUR Residential 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 ARMOUR Residential will offset losses from the drop in ARMOUR Residential's long position.| Equity Lifestyle vs. UMH Properties | Equity Lifestyle vs. UDR Inc | Equity Lifestyle vs. AvalonBay Communities | Equity Lifestyle vs. Nexpoint Residential Trust |
| ARMOUR Residential vs. Ellington Financial LLC | ARMOUR Residential vs. Two Harbors Investments | ARMOUR Residential vs. Dynex Capital | ARMOUR Residential vs. Ellington Residential Mortgage |
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 CEOs Directory module to screen CEOs from public companies around the world.
Other Complementary Tools
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| Share Portfolio Track or share privately all of your investments from the convenience of any device | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences |