Correlation Between Arlington Asset and Associated Capital

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Can any of the company-specific risk be diversified away by investing in both Arlington Asset and Associated Capital 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 Arlington Asset and Associated Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Arlington Asset Investment and Associated Capital Group, you can compare the effects of market volatilities on Arlington Asset and Associated Capital 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 Arlington Asset with a short position of Associated Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arlington Asset and Associated Capital.

Diversification Opportunities for Arlington Asset and Associated Capital

-0.37
  Correlation Coefficient

Very good diversification

The 3 months correlation between Arlington and Associated is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Arlington Asset Investment and Associated Capital Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Associated Capital and Arlington Asset 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 Arlington Asset Investment are associated (or correlated) with Associated Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Associated Capital has no effect on the direction of Arlington Asset i.e., Arlington Asset and Associated Capital go up and down completely randomly.

Pair Corralation between Arlington Asset and Associated Capital

If you would invest  484.00  in Arlington Asset Investment on January 20, 2024 and sell it today you would earn a total of  0.00  from holding Arlington Asset Investment or generate 0.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy2.33%
ValuesDaily Returns

Arlington Asset Investment  vs.  Associated Capital Group

 Performance 
       Timeline  
Arlington Asset Inve 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Arlington Asset Investment has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound forward indicators, Arlington Asset is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.
Associated Capital 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Associated Capital Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, Associated Capital is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Arlington Asset and Associated Capital Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Arlington Asset and Associated Capital

The main advantage of trading using opposite Arlington Asset and Associated Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arlington Asset position performs unexpectedly, Associated Capital 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 Associated Capital will offset losses from the drop in Associated Capital's long position.
The idea behind Arlington Asset Investment and Associated Capital Group 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.

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