Correlation Between FTAI Infrastructure and Alliance Recovery

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

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

Diversification Opportunities for FTAI Infrastructure and Alliance Recovery

-0.01

Correlation Coefficient

FTAI Infrastructure  Alliance Recovery

Good diversification

The 3 months correlation between FTAI and Alliance is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding FTAI Infrastructure and Alliance Recovery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alliance Recovery and FTAI Infrastructure 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 FTAI Infrastructure are associated (or correlated) with Alliance Recovery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alliance Recovery has no effect on the direction of FTAI Infrastructure i.e., FTAI Infrastructure and Alliance Recovery go up and down completely randomly.

Pair Corralation between FTAI Infrastructure and Alliance Recovery

Considering the 90-day investment horizon FTAI Infrastructure is expected to generate 0.74 times more return on investment than Alliance Recovery. However, FTAI Infrastructure is 1.34 times less risky than Alliance Recovery. It trades about 0.0 of its potential returns per unit of risk. Alliance Recovery is currently generating about -0.02 per unit of risk. If you would invest  869.00  in FTAI Infrastructure on September 12, 2024 and sell it today you would lose (24.00) from holding FTAI Infrastructure or give up 2.76% of portfolio value over 90 days.

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

FTAI Infrastructure  vs.  Alliance Recovery

FTAI Infrastructure

Risk-Adjusted Performance

0 of 100

Weak

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

Alliance Recovery

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Alliance Recovery has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Alliance Recovery is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with FTAI Infrastructure and Alliance Recovery

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

The idea behind FTAI Infrastructure and Alliance Recovery 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.