Correlation Between Fortress Transportation and Black Diamond

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

Diversification Opportunities for Fortress Transportation and Black Diamond

0.41

Correlation Coefficient

Fortress Transportation  Black Diamond

Very weak diversification

The 3 months correlation between Fortress and Black is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Fortress Transportation and and Black Diamond Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Black Diamond Group 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 Black Diamond. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Black Diamond Group has no effect on the direction of Fortress Transportation i.e., Fortress Transportation and Black Diamond go up and down completely randomly.

Pair Corralation between Fortress Transportation and Black Diamond

Assuming the 90 days horizon Fortress Transportation is expected to generate 7.58 times less return on investment than Black Diamond. But when comparing it to its historical volatility, Fortress Transportation and is 2.27 times less risky than Black Diamond. It trades about 0.13 of its potential returns per unit of risk. Black Diamond Group is currently generating about 0.43 of returns per unit of risk over similar time horizon. If you would invest  624.00  in Black Diamond Group on September 16, 2024 and sell it today you would earn a total of  37.00  from holding Black Diamond Group or generate 5.93% return on investment over 90 days.

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

Fortress Transportation and  vs.  Black Diamond Group

Fortress Transportation

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fortress Transportation and has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Black Diamond Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Black Diamond Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable primary indicators, Black Diamond is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Fortress Transportation and Black Diamond

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

The idea behind Fortress Transportation and and Black Diamond Group 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.