Correlation Between Alphabet and Fortress Income

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

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

Diversification Opportunities for Alphabet and Fortress Income

-0.2

Correlation Coefficient

Alphabet  Fortress Income

Good diversification

The 3 months correlation between Alphabet and Fortress is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Alphabet Inc Class C and Fortress Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fortress Income and Alphabet 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 Alphabet Inc Class C are associated (or correlated) with Fortress Income. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fortress Income has no effect on the direction of Alphabet i.e., Alphabet and Fortress Income go up and down completely randomly.

Pair Corralation between Alphabet and Fortress Income

Given the investment horizon of 90 days Alphabet Inc Class C is expected to generate 2.58 times more return on investment than Fortress Income. However, Alphabet is 2.58 times more volatile than Fortress Income. It trades about 0.35 of its potential returns per unit of risk. Fortress Income is currently generating about 0.28 per unit of risk. If you would invest  16,924  in Alphabet Inc Class C on September 25, 2024 and sell it today you would earn a total of  2,833  from holding Alphabet Inc Class C or generate 16.74% return on investment over 90 days.

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

Alphabet Inc Class C  vs.  Fortress Income

Alphabet Class C

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Alphabet Inc Class C are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Alphabet reported solid returns over the last few months and may actually be approaching a breakup point.

Fortress Income

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fortress Income has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Fortress Income is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Alphabet and Fortress Income

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

The idea behind Alphabet Inc Class C and Fortress Income 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.