Correlation Between Fortress Biotech and LifeMD Preferred

Can any of the company-specific risk be diversified away by investing in both Fortress Biotech and LifeMD Preferred 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 LifeMD Preferred 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 LifeMD Preferred Series, you can compare the effects of market volatilities on Fortress Biotech and LifeMD Preferred 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 LifeMD Preferred. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fortress Biotech and LifeMD Preferred.

Diversification Opportunities for Fortress Biotech and LifeMD Preferred

-0.18

Correlation Coefficient

Fortress Biotech  LifeMD Preferred

Good diversification

The 3 months correlation between Fortress and LifeMD is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Fortress Biotech Pref and LifeMD Preferred Series in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LifeMD Preferred Series 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 LifeMD Preferred. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LifeMD Preferred Series has no effect on the direction of Fortress Biotech i.e., Fortress Biotech and LifeMD Preferred go up and down completely randomly.

Pair Corralation between Fortress Biotech and LifeMD Preferred

Assuming the 90 days horizon Fortress Biotech Pref is expected to under-perform the LifeMD Preferred. In addition to that, Fortress Biotech is 1.53 times more volatile than LifeMD Preferred Series. It trades about -0.02 of its total potential returns per unit of risk. LifeMD Preferred Series is currently generating about 0.14 per unit of volatility. If you would invest  2,142  in LifeMD Preferred Series on December 30, 2024 and sell it today you would earn a total of  348.00  from holding LifeMD Preferred Series or generate 16.25% return on investment over 90 days.

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

Fortress Biotech Pref  vs.  LifeMD Preferred Series

Fortress Biotech Pref

Risk-Adjusted Performance

Very Weak

Over the last 90 days Fortress Biotech Pref has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Fortress Biotech is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

LifeMD Preferred Series

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in LifeMD Preferred Series are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak fundamental indicators, LifeMD Preferred reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Fortress Biotech and LifeMD Preferred

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

The idea behind Fortress Biotech Pref and LifeMD Preferred Series 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.