Correlation Between Global Net and Fortress Transp

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

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

Diversification Opportunities for Global Net and Fortress Transp

0.04

Correlation Coefficient

Global Net  Fortress Transp

Significant diversification

The 3 months correlation between Global and Fortress is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Global Net Lease and Fortress Transp Infra in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fortress Transp Infra and Global Net 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 Global Net Lease are associated (or correlated) with Fortress Transp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fortress Transp Infra has no effect on the direction of Global Net i.e., Global Net and Fortress Transp go up and down completely randomly.

Pair Corralation between Global Net and Fortress Transp

Assuming the 90 days trading horizon Global Net Lease is expected to under-perform the Fortress Transp. But the stock apears to be less risky and, when comparing its historical volatility, Global Net Lease is 2.2 times less risky than Fortress Transp. The stock trades about 0.0 of its potential returns per unit of risk. The Fortress Transp Infra is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  15,677  in Fortress Transp Infra on October 9, 2024 and sell it today you would earn a total of  119.00  from holding Fortress Transp Infra or generate 0.76% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	97.5%
Values	Daily Returns

Global Net Lease  vs.  Fortress Transp Infra

Global Net Lease

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Global Net Lease are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound essential indicators, Global Net is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Fortress Transp Infra

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Fortress Transp Infra are ranked lower than 4 (%) 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.

Pair Trading with Global Net and Fortress Transp

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

The idea behind Global Net Lease and Fortress Transp Infra 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.