Correlation Between Fortress Biotech and Silo Pharma

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

Diversification Opportunities for Fortress Biotech and Silo Pharma

0.32

Correlation Coefficient

Fortress Biotech  Silo Pharma

Weak diversification

The 3 months correlation between Fortress and Silo is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Fortress Biotech Pref and Silo Pharma in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Silo Pharma 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 Silo Pharma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Silo Pharma has no effect on the direction of Fortress Biotech i.e., Fortress Biotech and Silo Pharma go up and down completely randomly.

Pair Corralation between Fortress Biotech and Silo Pharma

Assuming the 90 days horizon Fortress Biotech Pref is expected to under-perform the Silo Pharma. But the preferred stock apears to be less risky and, when comparing its historical volatility, Fortress Biotech Pref is 3.12 times less risky than Silo Pharma. The preferred stock trades about -0.02 of its potential returns per unit of risk. The Silo Pharma is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  89.00  in Silo Pharma on December 29, 2024 and sell it today you would earn a total of  36.00  from holding Silo Pharma or generate 40.45% return on investment over 90 days.

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

Fortress Biotech Pref  vs.  Silo Pharma

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.

Silo Pharma

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Silo Pharma are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal essential indicators, Silo Pharma displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Fortress Biotech and Silo Pharma

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

The idea behind Fortress Biotech Pref and Silo Pharma 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.

Check out your portfolio center.

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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.