Correlation Between Growthpoint Properties and Fortress Income

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

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

Diversification Opportunities for Growthpoint Properties and Fortress Income

0.58

Correlation Coefficient

Growthpoint Properties  Fortress Income

Very weak diversification

The 3 months correlation between Growthpoint and Fortress is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Growthpoint Properties and Fortress Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fortress Income and Growthpoint Properties 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 Growthpoint Properties 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 Growthpoint Properties i.e., Growthpoint Properties and Fortress Income go up and down completely randomly.

Pair Corralation between Growthpoint Properties and Fortress Income

Assuming the 90 days trading horizon Growthpoint Properties is expected to generate 15.22 times less return on investment than Fortress Income. But when comparing it to its historical volatility, Growthpoint Properties is 3.67 times less risky than Fortress Income. It trades about 0.02 of its potential returns per unit of risk. Fortress Income is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  47,500  in Fortress Income on September 25, 2024 and sell it today you would earn a total of  155,000  from holding Fortress Income or generate 326.32% return on investment over 90 days.

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

Growthpoint Properties  vs.  Fortress Income

Growthpoint Properties

Risk-Adjusted Performance

0 of 100

Very Weak

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

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 Growthpoint Properties and Fortress Income

The main advantage of trading using opposite Growthpoint Properties and Fortress Income positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Growthpoint Properties 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 Growthpoint Properties 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.