Correlation Between American Campus and ARMOUR Residential
Can any of the company-specific risk be diversified away by investing in both American Campus 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 American Campus and ARMOUR Residential into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Campus Communities and ARMOUR Residential REIT, you can compare the effects of market volatilities on American Campus 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 American Campus with a short position of ARMOUR Residential. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Campus and ARMOUR Residential.
Diversification Opportunities for American Campus and ARMOUR Residential
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between American and ARMOUR is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding American Campus Communities 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 American Campus 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 American Campus Communities 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 American Campus i.e., American Campus and ARMOUR Residential go up and down completely randomly.
Pair Corralation between American Campus and ARMOUR Residential
If you would invest 6,542 in American Campus Communities on January 26, 2024 and sell it today you would earn a total of 0.00 from holding American Campus Communities or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 0.4% |
| Values | Daily Returns |
American Campus Communities vs. ARMOUR Residential REIT
Performance |
| Timeline |
| American Campus Comm |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| ARMOUR Residential REIT |
American Campus and ARMOUR Residential Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Campus and ARMOUR Residential
The main advantage of trading using opposite American Campus and ARMOUR Residential positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Campus 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.| American Campus vs. Kura Sushi USA | American Campus vs. Beyond Inc | American Campus vs. BJs Restaurants | American Campus vs. National Vision Holdings |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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