Correlation Between Broadstone Net and Armada Hflr

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

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

Diversification Opportunities for Broadstone Net and Armada Hflr

0.8

Correlation Coefficient

Broadstone Net  Armada Hflr

Very poor diversification

The 3 months correlation between Broadstone and Armada is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Broadstone Net LeaseInc 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 Broadstone Net 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 Broadstone Net LeaseInc 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 Broadstone Net i.e., Broadstone Net and Armada Hflr go up and down completely randomly.

Pair Corralation between Broadstone Net and Armada Hflr

Considering the 90-day investment horizon Broadstone Net is expected to generate 1.28 times less return on investment than Armada Hflr. In addition to that, Broadstone Net is 1.03 times more volatile than Armada Hflr Pr. It trades about 0.08 of its total potential returns per unit of risk. Armada Hflr Pr is currently generating about 0.11 per unit of volatility. If you would invest  1,037  in Armada Hflr Pr on February 3, 2024 and sell it today you would earn a total of  36.00  from holding Armada Hflr Pr or generate 3.47% return on investment over 90 days.

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

Broadstone Net LeaseInc  vs.  Armada Hflr Pr

Broadstone Net LeaseInc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Broadstone Net LeaseInc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Broadstone Net is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional 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 fairly strong technical indicators, Armada Hflr is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Broadstone Net and Armada Hflr

The main advantage of trading using opposite Broadstone Net and Armada Hflr positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Broadstone Net 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 Broadstone Net LeaseInc 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.