Correlation Between ACRES Commercial and Fortress Transportation

Can any of the company-specific risk be diversified away by investing in both ACRES Commercial and Fortress Transportation 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 ACRES Commercial and Fortress Transportation into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between ACRES Commercial Realty and Fortress Transportation and, you can compare the effects of market volatilities on ACRES Commercial and Fortress Transportation 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 ACRES Commercial with a short position of Fortress Transportation. Check out your portfolio center. Please also check ongoing floating volatility patterns of ACRES Commercial and Fortress Transportation.

Diversification Opportunities for ACRES Commercial and Fortress Transportation

0.84

Correlation Coefficient

ACRES Commercial  Fortress Transportation

Very poor diversification

The 3 months correlation between ACRES and Fortress is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding ACRES Commercial Realty and Fortress Transportation and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fortress Transportation and ACRES Commercial 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 ACRES Commercial Realty are associated (or correlated) with Fortress Transportation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fortress Transportation has no effect on the direction of ACRES Commercial i.e., ACRES Commercial and Fortress Transportation go up and down completely randomly.

Pair Corralation between ACRES Commercial and Fortress Transportation

Assuming the 90 days trading horizon ACRES Commercial Realty is expected to generate 1.22 times more return on investment than Fortress Transportation. However, ACRES Commercial is 1.22 times more volatile than Fortress Transportation and. It trades about 0.12 of its potential returns per unit of risk. Fortress Transportation and is currently generating about 0.07 per unit of risk. If you would invest  2,453  in ACRES Commercial Realty on December 2, 2024 and sell it today you would earn a total of  43.00  from holding ACRES Commercial Realty or generate 1.75% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	85.25%
Values	Daily Returns

ACRES Commercial Realty  vs.  Fortress Transportation and

ACRES Commercial Realty

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ACRES Commercial Realty are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, ACRES Commercial is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Fortress Transportation

Risk-Adjusted Performance

Modest

Over the last 90 days Fortress Transportation and has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy forward indicators, Fortress Transportation is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with ACRES Commercial and Fortress Transportation

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

The idea behind ACRES Commercial Realty and Fortress Transportation and 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.