Correlation Between Fortress Transp and Snap On

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

Diversification Opportunities for Fortress Transp and Snap On

0.32

Correlation Coefficient

Fortress Transp  Snap On

Weak diversification

The 3 months correlation between Fortress and Snap is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Fortress Transp Infra and Snap On in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Snap On 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 Snap On. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Snap On has no effect on the direction of Fortress Transp i.e., Fortress Transp and Snap On go up and down completely randomly.

Pair Corralation between Fortress Transp and Snap On

Given the investment horizon of 90 days Fortress Transp Infra is expected to generate 2.28 times more return on investment than Snap On. However, Fortress Transp is 2.28 times more volatile than Snap On. It trades about 0.1 of its potential returns per unit of risk. Snap On is currently generating about 0.05 per unit of risk. If you would invest  3,046  in Fortress Transp Infra on October 24, 2024 and sell it today you would earn a total of  5,333  from holding Fortress Transp Infra or generate 175.08% return on investment over 90 days.

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

Fortress Transp Infra  vs.  Snap On

Fortress Transp Infra

Risk-Adjusted Performance

0 of 100

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 unsteady performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in February 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Snap On

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Snap On are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating basic indicators, Snap On may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Fortress Transp and Snap On

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

The idea behind Fortress Transp Infra and Snap On 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.