Correlation Between Arbor Realty and Granite Point

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

By analyzing existing cross correlation between Arbor Realty Trust and Granite Point Mortgage, you can compare the effects of market volatilities on Arbor Realty and Granite Point 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 Arbor Realty with a short position of Granite Point. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arbor Realty and Granite Point.

Diversification Opportunities for Arbor Realty and Granite Point

-0.67

Correlation Coefficient

Arbor Realty  Granite Point

Excellent diversification

The 3 months correlation between Arbor and Granite is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Arbor Realty Trust and Granite Point Mortgage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Granite Point Mortgage and Arbor Realty 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 Arbor Realty Trust are associated (or correlated) with Granite Point. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Granite Point Mortgage has no effect on the direction of Arbor Realty i.e., Arbor Realty and Granite Point go up and down completely randomly.

Pair Corralation between Arbor Realty and Granite Point

Considering the 90-day investment horizon Arbor Realty Trust is expected to generate 0.91 times more return on investment than Granite Point. However, Arbor Realty Trust is 1.1 times less risky than Granite Point. It trades about 0.08 of its potential returns per unit of risk. Granite Point Mortgage is currently generating about -0.21 per unit of risk. If you would invest  1,238  in Arbor Realty Trust on March 5, 2024 and sell it today you would earn a total of  130.00  from holding Arbor Realty Trust or generate 10.5% return on investment over 90 days.

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

Arbor Realty Trust  vs.  Granite Point Mortgage

Arbor Realty Trust

Risk-Adjusted Performance

6 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Arbor Realty Trust are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively inconsistent fundamental drivers, Arbor Realty may actually be approaching a critical reversion point that can send shares even higher in July 2024.

Granite Point Mortgage

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Granite Point Mortgage has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's primary indicators remain comparatively stable which may send shares a bit higher in July 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Arbor Realty and Granite Point

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

The idea behind Arbor Realty Trust and Granite Point Mortgage 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.