Correlation Between Corporacion America and Fortress Transp

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

By analyzing existing cross correlation between Corporacion America Airports and Fortress Transp Infra, you can compare the effects of market volatilities on Corporacion America and Fortress Transp 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 Corporacion America with a short position of Fortress Transp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Corporacion America and Fortress Transp.

Diversification Opportunities for Corporacion America and Fortress Transp

-0.19

Correlation Coefficient

Corporacion America  Fortress Transp

Good diversification

The 3 months correlation between Corporacion and Fortress is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Corporacion America Airports and Fortress Transp Infra in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fortress Transp Infra and Corporacion America 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 Corporacion America Airports are associated (or correlated) with Fortress Transp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fortress Transp Infra has no effect on the direction of Corporacion America i.e., Corporacion America and Fortress Transp go up and down completely randomly.

Pair Corralation between Corporacion America and Fortress Transp

Given the investment horizon of 90 days Corporacion America Airports is expected to generate 0.27 times more return on investment than Fortress Transp. However, Corporacion America Airports is 3.68 times less risky than Fortress Transp. It trades about 0.09 of its potential returns per unit of risk. Fortress Transp Infra is currently generating about -0.08 per unit of risk. If you would invest  1,902  in Corporacion America Airports on October 26, 2024 and sell it today you would earn a total of  78.00  from holding Corporacion America Airports or generate 4.1% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Corporacion America Airports  vs.  Fortress Transp Infra

Corporacion America

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Corporacion America Airports are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Corporacion America may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Fortress Transp Infra

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fortress Transp Infra has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in February 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Corporacion America and Fortress Transp

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

The idea behind Corporacion America Airports and Fortress Transp Infra 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.