Correlation Between Fortress Biotech and Vg Life

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

Diversification Opportunities for Fortress Biotech and Vg Life

-0.09

Correlation Coefficient

Fortress Biotech  Vg Life

Good diversification

The 3 months correlation between Fortress and VGLS is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Fortress Biotech Pref and Vg Life Sciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vg Life Sciences 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 Vg Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vg Life Sciences has no effect on the direction of Fortress Biotech i.e., Fortress Biotech and Vg Life go up and down completely randomly.

Pair Corralation between Fortress Biotech and Vg Life

Assuming the 90 days horizon Fortress Biotech is expected to generate 444.3 times less return on investment than Vg Life. But when comparing it to its historical volatility, Fortress Biotech Pref is 62.29 times less risky than Vg Life. It trades about 0.03 of its potential returns per unit of risk. Vg Life Sciences is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  0.01  in Vg Life Sciences on November 28, 2024 and sell it today you would earn a total of  0.00  from holding Vg Life Sciences or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.31%
Values	Daily Returns

Fortress Biotech Pref  vs.  Vg Life Sciences

Fortress Biotech Pref

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Fortress Biotech Pref are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Fortress Biotech may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Vg Life Sciences

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Vg Life Sciences are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile essential indicators, Vg Life unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Fortress Biotech and Vg Life

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

The idea behind Fortress Biotech Pref and Vg Life Sciences 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.