Correlation Between Vroom and ARMOUR Residential

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

Diversification Opportunities for Vroom and ARMOUR Residential

0.77
  Correlation Coefficient

Poor diversification

The 3 months correlation between Vroom and ARMOUR is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Vroom Inc 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 Vroom 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 Vroom Inc 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 Vroom i.e., Vroom and ARMOUR Residential go up and down completely randomly.

Pair Corralation between Vroom and ARMOUR Residential

Considering the 90-day investment horizon Vroom Inc is expected to under-perform the ARMOUR Residential. In addition to that, Vroom is 3.34 times more volatile than ARMOUR Residential REIT. It trades about -0.08 of its total potential returns per unit of risk. ARMOUR Residential REIT is currently generating about -0.03 per unit of volatility. If you would invest  838.00  in ARMOUR Residential REIT on September 8, 2022 and sell it today you would lose (252.00)  from holding ARMOUR Residential REIT or give up 30.07% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Vroom Inc  vs.  ARMOUR Residential REIT

 Performance (%) 
       Timeline  
Vroom Inc 
Vroom Performance
0 of 100
Over the last 90 days Vroom Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Even with sluggish performance in the last few months, the Stock's basic indicators remain relatively steady which may send shares a bit higher in January 2023. The new chaos may also be a sign of medium-term up-swing for the company stakeholders.

Vroom Price Channel

ARMOUR Residential REIT 
ARMOUR Performance
0 of 100
Over the last 90 days ARMOUR Residential REIT has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest unsteady performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

ARMOUR Price Channel

Vroom and ARMOUR Residential Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Vroom and ARMOUR Residential

The main advantage of trading using opposite Vroom and ARMOUR Residential positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vroom 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.
Vroom vs. Welltower
Vroom vs. Cigna Corp
Vroom vs. Pacific Health Care
Vroom vs. Assura Plc
The idea behind Vroom Inc and ARMOUR Residential REIT 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.
ARMOUR Residential vs. BeiGene
ARMOUR Residential vs. CSL Limited
ARMOUR Residential vs. CSL
ARMOUR Residential vs. Vertex 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.

Other Complementary Tools

Transaction History
View history of all your transactions and understand their impact on performance
Go
Portfolio File Import
Quickly import all of your third-party portfolios from your local drive in csv format
Go
Share Portfolio
Track or share privately all of your investments from the convenience of any device
Go
Theme Ratings
Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance
Go
Bollinger Bands
Use Bollinger Bands indicator to analyze target price for a given investing horizon
Go
Headlines Timeline
Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity
Go
Portfolio Suggestion
Get suggestions outside of your existing asset allocation including your own model portfolios
Go