Correlation Between Fortress Biotech and Eyepoint Pharmaceuticals

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

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

Diversification Opportunities for Fortress Biotech and Eyepoint Pharmaceuticals

-0.65

Correlation Coefficient

Fortress Biotech  Eyepoint Pharmaceuticals

Excellent diversification

The 3 months correlation between Fortress and Eyepoint is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Fortress Biotech Pref and Eyepoint Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eyepoint Pharmaceuticals and Fortress Biotech 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 Fortress Biotech Pref are associated (or correlated) with Eyepoint Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eyepoint Pharmaceuticals has no effect on the direction of Fortress Biotech i.e., Fortress Biotech and Eyepoint Pharmaceuticals go up and down completely randomly.

Pair Corralation between Fortress Biotech and Eyepoint Pharmaceuticals

Assuming the 90 days horizon Fortress Biotech Pref is expected to generate 0.72 times more return on investment than Eyepoint Pharmaceuticals. However, Fortress Biotech Pref is 1.39 times less risky than Eyepoint Pharmaceuticals. It trades about 0.1 of its potential returns per unit of risk. Eyepoint Pharmaceuticals is currently generating about -0.05 per unit of risk. If you would invest  576.00  in Fortress Biotech Pref on October 23, 2024 and sell it today you would earn a total of  122.00  from holding Fortress Biotech Pref or generate 21.18% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.36%
Values	Daily Returns

Fortress Biotech Pref  vs.  Eyepoint Pharmaceuticals

Fortress Biotech Pref

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Fortress Biotech Pref are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Even with relatively uncertain basic indicators, Fortress Biotech reported solid returns over the last few months and may actually be approaching a breakup point.

Eyepoint Pharmaceuticals

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Fortress Biotech and Eyepoint Pharmaceuticals

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

The idea behind Fortress Biotech Pref and Eyepoint Pharmaceuticals 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.