Correlation Between Fortress Biotech and UroGen Pharma

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

Diversification Opportunities for Fortress Biotech and UroGen Pharma

0.66

Correlation Coefficient

Fortress Biotech  UroGen Pharma

Poor diversification

The 3 months correlation between Fortress and UroGen is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Fortress Biotech Pref and UroGen Pharma in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UroGen 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 UroGen Pharma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UroGen Pharma has no effect on the direction of Fortress Biotech i.e., Fortress Biotech and UroGen Pharma go up and down completely randomly.

Pair Corralation between Fortress Biotech and UroGen Pharma

Assuming the 90 days horizon Fortress Biotech Pref is expected to under-perform the UroGen Pharma. But the preferred stock apears to be less risky and, when comparing its historical volatility, Fortress Biotech Pref is 1.04 times less risky than UroGen Pharma. The preferred stock trades about -0.11 of its potential returns per unit of risk. The UroGen Pharma is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  1,391  in UroGen Pharma on August 30, 2024 and sell it today you would lose (125.00) from holding UroGen Pharma or give up 8.99% of portfolio value over 90 days.

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

Fortress Biotech Pref  vs.  UroGen Pharma

Fortress Biotech Pref

Risk-Adjusted Performance

0 of 100

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 weak performance in the last few months, the Preferred Stock's basic indicators remain relatively invariable which may send shares a bit higher in December 2024. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

UroGen Pharma

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days UroGen Pharma has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's technical and fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Fortress Biotech and UroGen Pharma

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

The idea behind Fortress Biotech Pref and UroGen 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.