Correlation Between Blue Label and Fortress Income

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

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

Diversification Opportunities for Blue Label and Fortress Income

0.3

Correlation Coefficient

Blue Label  Fortress Income

Weak diversification

The 3 months correlation between Blue and Fortress is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Blue Label Telecoms and Fortress Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fortress Income and Blue Label 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 Blue Label Telecoms are associated (or correlated) with Fortress Income. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fortress Income has no effect on the direction of Blue Label i.e., Blue Label and Fortress Income go up and down completely randomly.

Pair Corralation between Blue Label and Fortress Income

Assuming the 90 days trading horizon Blue Label is expected to generate 2.64 times less return on investment than Fortress Income. But when comparing it to its historical volatility, Blue Label Telecoms is 3.13 times less risky than Fortress Income. It trades about 0.1 of its potential returns per unit of risk. Fortress Income is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  59,100  in Fortress Income on October 6, 2024 and sell it today you would earn a total of  143,800  from holding Fortress Income or generate 243.32% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.67%
Values	Daily Returns

Blue Label Telecoms  vs.  Fortress Income

Blue Label Telecoms

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Blue Label Telecoms are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Blue Label may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Fortress Income

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Fortress Income are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Fortress Income is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Blue Label and Fortress Income

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

The idea behind Blue Label Telecoms and Fortress Income 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.