Correlation Between Air T and Fortress Biotech

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

By analyzing existing cross correlation between Air T Inc and Fortress Biotech Pref, you can compare the effects of market volatilities on Air T and Fortress Biotech 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 Air T with a short position of Fortress Biotech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air T and Fortress Biotech.

Diversification Opportunities for Air T and Fortress Biotech

0.25

Correlation Coefficient

Air T  Fortress Biotech

Modest diversification

The 3 months correlation between Air and Fortress is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Air T Inc and Fortress Biotech Pref in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fortress Biotech Pref and Air T 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 Air T Inc are associated (or correlated) with Fortress Biotech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fortress Biotech Pref has no effect on the direction of Air T i.e., Air T and Fortress Biotech go up and down completely randomly.

Pair Corralation between Air T and Fortress Biotech

Assuming the 90 days horizon Air T Inc is expected to generate 1.02 times more return on investment than Fortress Biotech. However, Air T is 1.02 times more volatile than Fortress Biotech Pref. It trades about 0.02 of its potential returns per unit of risk. Fortress Biotech Pref is currently generating about 0.0 per unit of risk. If you would invest  1,716  in Air T Inc on September 24, 2024 and sell it today you would lose (6.00) from holding Air T Inc or give up 0.35% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	94.16%
Values	Daily Returns

Air T Inc  vs.  Fortress Biotech Pref

Air T Inc

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Air T Inc are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Air T is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Fortress Biotech Pref

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Fortress Biotech Pref are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Even with relatively inconsistent basic indicators, Fortress Biotech reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Air T and Fortress Biotech

The main advantage of trading using opposite Air T and Fortress Biotech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air T position performs unexpectedly, Fortress Biotech 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 Biotech will offset losses from the drop in Fortress Biotech's long position.

The idea behind Air T Inc and Fortress Biotech Pref 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.

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 the Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.