Correlation Between Fortress Transportation and PROG Holdings

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

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

Diversification Opportunities for Fortress Transportation and PROG Holdings

0.27

Correlation Coefficient

Fortress Transportation  PROG Holdings

Modest diversification

The 3 months correlation between Fortress and PROG is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Fortress Transportation and and PROG Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PROG Holdings and Fortress Transportation 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 Transportation and are associated (or correlated) with PROG Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PROG Holdings has no effect on the direction of Fortress Transportation i.e., Fortress Transportation and PROG Holdings go up and down completely randomly.

Pair Corralation between Fortress Transportation and PROG Holdings

Assuming the 90 days horizon Fortress Transportation is expected to generate 4.7 times less return on investment than PROG Holdings. But when comparing it to its historical volatility, Fortress Transportation and is 3.28 times less risky than PROG Holdings. It trades about 0.04 of its potential returns per unit of risk. PROG Holdings is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  4,495  in PROG Holdings on September 12, 2024 and sell it today you would earn a total of  315.00  from holding PROG Holdings or generate 7.01% return on investment over 90 days.

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

Fortress Transportation and  vs.  PROG Holdings

Fortress Transportation

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Fortress Transportation and are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy forward indicators, Fortress Transportation is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

PROG Holdings

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in PROG Holdings are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, PROG Holdings may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Fortress Transportation and PROG Holdings

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

The idea behind Fortress Transportation and and PROG Holdings 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 Stocks Directory module to find actively traded stocks across global markets.