Correlation Between E Media and Fortress Income

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

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

Diversification Opportunities for E Media and Fortress Income

0.17

Correlation Coefficient

E Media  Fortress Income

Average diversification

The 3 months correlation between EMH and Fortress is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding E Media Holdings and Fortress Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fortress Income and E Media 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 E Media Holdings 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 E Media i.e., E Media and Fortress Income go up and down completely randomly.

Pair Corralation between E Media and Fortress Income

Assuming the 90 days trading horizon E Media is expected to generate 36.7 times less return on investment than Fortress Income. But when comparing it to its historical volatility, E Media Holdings is 2.03 times less risky than Fortress Income. It trades about 0.0 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  67,000  in Fortress Income on September 28, 2024 and sell it today you would earn a total of  134,500  from holding Fortress Income or generate 200.75% return on investment over 90 days.

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

E Media Holdings  vs.  Fortress Income

E Media Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days E Media Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, E Media is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Fortress Income

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fortress Income has generated negative risk-adjusted returns adding no value to investors with long positions. 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 E Media and Fortress Income

The main advantage of trading using opposite E Media and Fortress Income positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if E Media 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 E Media Holdings 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.