Correlation Between Fortress Transportation and Triton International

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

Diversification Opportunities for Fortress Transportation and Triton International

0.34

Correlation Coefficient

Fortress Transportation  Triton International

Weak diversification

The 3 months correlation between Fortress and Triton is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Fortress Transportation and and Triton International Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Triton International 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 Triton International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Triton International has no effect on the direction of Fortress Transportation i.e., Fortress Transportation and Triton International go up and down completely randomly.

Pair Corralation between Fortress Transportation and Triton International

Assuming the 90 days horizon Fortress Transportation is expected to generate 1.67 times less return on investment than Triton International. But when comparing it to its historical volatility, Fortress Transportation and is 1.01 times less risky than Triton International. It trades about 0.03 of its potential returns per unit of risk. Triton International Limited is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  2,566  in Triton International Limited on October 20, 2024 and sell it today you would earn a total of  7.00  from holding Triton International Limited or generate 0.27% 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.  Triton International Limited

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.

Triton International

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Triton International Limited are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Triton International is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Fortress Transportation and Triton International

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

The idea behind Fortress Transportation and and Triton International Limited 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.