Correlation Between Fortress Income and Advtech

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

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

Diversification Opportunities for Fortress Income and Advtech

0.43

Correlation Coefficient

Fortress Income  Advtech

Very weak diversification

The 3 months correlation between Fortress and Advtech is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Fortress Income and Advtech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Advtech and Fortress Income 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 Income are associated (or correlated) with Advtech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Advtech has no effect on the direction of Fortress Income i.e., Fortress Income and Advtech go up and down completely randomly.

Pair Corralation between Fortress Income and Advtech

Assuming the 90 days trading horizon Fortress Income is expected to generate 3.46 times more return on investment than Advtech. However, Fortress Income is 3.46 times more volatile than Advtech. It trades about 0.07 of its potential returns per unit of risk. Advtech is currently generating about 0.09 per unit of risk. If you would invest  47,200  in Fortress Income on October 4, 2024 and sell it today you would earn a total of  155,400  from holding Fortress Income or generate 329.24% return on investment over 90 days.

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

Fortress Income  vs.  Advtech

Fortress Income

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fortress Income has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Fortress Income is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Advtech

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Advtech are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Advtech may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Fortress Income and Advtech

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

The idea behind Fortress Income and Advtech 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.