Correlation Between Armour Residential and Allena Pharmaceuticals

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Armour Residential and Allena Pharmaceuticals 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 Armour Residential and Allena Pharmaceuticals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Armour Residential R and Allena Pharmaceuticals, you can compare the effects of market volatilities on Armour Residential and Allena Pharmaceuticals 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 Armour Residential with a short position of Allena Pharmaceuticals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Armour Residential and Allena Pharmaceuticals.

Diversification Opportunities for Armour Residential and Allena Pharmaceuticals

-0.15
  Correlation Coefficient

Good diversification

The 3 months correlation between Armour and Allena is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Armour Residential R and Allena Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allena Pharmaceuticals and Armour Residential 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 Armour Residential R are associated (or correlated) with Allena Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allena Pharmaceuticals has no effect on the direction of Armour Residential i.e., Armour Residential and Allena Pharmaceuticals go up and down completely randomly.

Pair Corralation between Armour Residential and Allena Pharmaceuticals

Considering the 90-day investment horizon Armour Residential R is expected to generate 0.18 times more return on investment than Allena Pharmaceuticals. However, Armour Residential R is 5.7 times less risky than Allena Pharmaceuticals. It trades about 0.24 of its potential returns per unit of risk. Allena Pharmaceuticals is currently generating about -0.07 per unit of risk. If you would invest  685.00  in Armour Residential R on May 16, 2022 and sell it today you would earn a total of  74.00  from holding Armour Residential R or generate 10.8% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Armour Residential R  vs.  Allena Pharmaceuticals

 Performance (%) 
       Timeline  
Armour Residential 
Armour Performance
3 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Armour Residential R are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively sluggish basic indicators, Armour Residential may actually be approaching a critical reversion point that can send shares even higher in September 2022.

Armour Price Channel

Allena Pharmaceuticals 
Allena Performance
5 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Allena Pharmaceuticals are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat sluggish basic indicators, Allena Pharmaceuticals sustained solid returns over the last few months and may actually be approaching a breakup point.

Allena Price Channel

Armour Residential and Allena Pharmaceuticals Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Armour Residential and Allena Pharmaceuticals

The main advantage of trading using opposite Armour Residential and Allena Pharmaceuticals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Armour Residential position performs unexpectedly, Allena Pharmaceuticals 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 Allena Pharmaceuticals will offset losses from the drop in Allena Pharmaceuticals' long position.
The idea behind Armour Residential R and Allena Pharmaceuticals 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.

Allena Pharmaceuticals

Pair trading matchups for Allena Pharmaceuticals

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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.

Other Complementary Tools

Price Transformation
Use Price Transformation models to analyze depth of different equity instruments across global markets
Go
Efficient Frontier
Plot and analyze your portfolio and positions against risk-return landscape of the market.
Go
Equity Search
Search for actively traded equities including funds and ETFs from over 30 global markets
Go
Watchlist Optimization
Optimize watchlists to build efficient portfolio or rebalance existing positions based on mean-variance optimization algorithm
Go
Headlines Timeline
Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity
Go
Aroon Oscillator
Analyze current equity momentum using Aroon Oscillator and other momentum ratios
Go
CEO Directory
Screen CEOs from public companies around the world
Go
Volatility Analysis
Get historical volatility and risk analysis based on latest market data
Go
Pair Correlation
Compare performance and examine fundamental relationship between any two equity instruments
Go
Cryptocurrency Center
Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency
Go
Portfolio Manager
State of the art Portfolio Manager to monitor and improve performance of your invested capital
Go