Correlation Between Fortress Transp and Tenaris SA

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

Diversification Opportunities for Fortress Transp and Tenaris SA

0.29

Correlation Coefficient

Fortress Transp  Tenaris SA

Modest diversification

The 3 months correlation between Fortress and Tenaris is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Fortress Transp Infra and Tenaris SA ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tenaris SA ADR 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 Tenaris SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tenaris SA ADR has no effect on the direction of Fortress Transp i.e., Fortress Transp and Tenaris SA go up and down completely randomly.

Pair Corralation between Fortress Transp and Tenaris SA

Given the investment horizon of 90 days Fortress Transp is expected to generate 1.03 times less return on investment than Tenaris SA. In addition to that, Fortress Transp is 2.19 times more volatile than Tenaris SA ADR. It trades about 0.09 of its total potential returns per unit of risk. Tenaris SA ADR is currently generating about 0.21 per unit of volatility. If you would invest  3,176  in Tenaris SA ADR on October 12, 2024 and sell it today you would earn a total of  702.00  from holding Tenaris SA ADR or generate 22.1% 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.  Tenaris SA ADR

Fortress Transp Infra

Risk-Adjusted Performance

7 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Fortress Transp Infra are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady basic indicators, Fortress Transp demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Tenaris SA ADR

Risk-Adjusted Performance

16 of 100

Solid

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

Pair Trading with Fortress Transp and Tenaris SA

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

The idea behind Fortress Transp Infra and Tenaris SA ADR 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..