Correlation Between Arbor Realty and EZCORP

Can any of the company-specific risk be diversified away by investing in both Arbor Realty and EZCORP 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 EZCORP 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 EZCORP Inc, you can compare the effects of market volatilities on Arbor Realty and EZCORP 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 EZCORP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arbor Realty and EZCORP.

Diversification Opportunities for Arbor Realty and EZCORP

-0.42

Correlation Coefficient

Arbor Realty  EZCORP

Very good diversification

The 3 months correlation between Arbor and EZCORP is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Arbor Realty Trust and EZCORP Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EZCORP Inc 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 EZCORP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EZCORP Inc has no effect on the direction of Arbor Realty i.e., Arbor Realty and EZCORP go up and down completely randomly.

Pair Corralation between Arbor Realty and EZCORP

Considering the 90-day investment horizon Arbor Realty is expected to generate 2.43 times less return on investment than EZCORP. But when comparing it to its historical volatility, Arbor Realty Trust is 1.01 times less risky than EZCORP. It trades about 0.04 of its potential returns per unit of risk. EZCORP Inc is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  1,108  in EZCORP Inc on January 26, 2024 and sell it today you would earn a total of  42.00  from holding EZCORP Inc or generate 3.79% return on investment over 90 days.

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

Arbor Realty Trust  vs.  EZCORP Inc

Arbor Realty Trust

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Arbor Realty Trust has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable fundamental drivers, Arbor Realty is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

EZCORP Inc

Risk-Adjusted Performance

16 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in EZCORP Inc are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady basic indicators, EZCORP showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Arbor Realty and EZCORP

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

The idea behind Arbor Realty Trust and EZCORP Inc 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.