Correlation Between Fortress Transp and Ashtead Gro

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

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

Diversification Opportunities for Fortress Transp and Ashtead Gro

-0.15

Correlation Coefficient

Fortress Transp  Ashtead Gro

Good diversification

The 3 months correlation between Fortress and Ashtead is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Fortress Transp Infra and Ashtead Gro in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ashtead Gro and Fortress Transp 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 Transp Infra are associated (or correlated) with Ashtead Gro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ashtead Gro has no effect on the direction of Fortress Transp i.e., Fortress Transp and Ashtead Gro go up and down completely randomly.

Pair Corralation between Fortress Transp and Ashtead Gro

Given the investment horizon of 90 days Fortress Transp Infra is expected to generate 4.06 times more return on investment than Ashtead Gro. However, Fortress Transp is 4.06 times more volatile than Ashtead Gro. It trades about 0.01 of its potential returns per unit of risk. Ashtead Gro is currently generating about -0.08 per unit of risk. If you would invest  12,613  in Fortress Transp Infra on December 30, 2024 and sell it today you would lose (1,377) from holding Fortress Transp Infra or give up 10.92% of portfolio value over 90 days.

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

Fortress Transp Infra  vs.  Ashtead Gro

Fortress Transp Infra

Risk-Adjusted Performance

Very Weak

Over the last 90 days Fortress Transp Infra has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Fortress Transp is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Ashtead Gro

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ashtead Gro has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Fortress Transp and Ashtead Gro

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

The idea behind Fortress Transp Infra and Ashtead Gro 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.