Correlation Between Custom Truck and Fortress Transp

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

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

Diversification Opportunities for Custom Truck and Fortress Transp

0.25

Correlation Coefficient

Custom Truck  Fortress Transp

Modest diversification

The 3 months correlation between Custom and Fortress is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Custom Truck One 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 Custom Truck 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 Custom Truck One 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 Custom Truck i.e., Custom Truck and Fortress Transp go up and down completely randomly.

Pair Corralation between Custom Truck and Fortress Transp

Given the investment horizon of 90 days Custom Truck One is expected to under-perform the Fortress Transp. But the stock apears to be less risky and, when comparing its historical volatility, Custom Truck One is 1.68 times less risky than Fortress Transp. The stock trades about -0.23 of its potential returns per unit of risk. The Fortress Transp Infra is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  10,335  in Fortress Transp Infra on December 1, 2024 and sell it today you would earn a total of  2,536  from holding Fortress Transp Infra or generate 24.54% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Custom Truck One  vs.  Fortress Transp Infra

Custom Truck One

Risk-Adjusted Performance

Very Weak

Over the last 90 days Custom Truck One has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Fortress Transp Infra

Risk-Adjusted Performance

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 latest unsteady performance, the Stock's basic indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Pair Trading with Custom Truck and Fortress Transp

The main advantage of trading using opposite Custom Truck and Fortress Transp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Custom Truck 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 Custom Truck One 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.