Correlation Between Global Ship and Fortress Transp

Can any of the company-specific risk be diversified away by investing in both Global Ship 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 Ship 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 Ship Lease and Fortress Transp Infra, you can compare the effects of market volatilities on Global Ship 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 Ship with a short position of Fortress Transp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Ship and Fortress Transp.

Diversification Opportunities for Global Ship and Fortress Transp

0.46

Correlation Coefficient

Global Ship  Fortress Transp

Very weak diversification

The 3 months correlation between Global and Fortress is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Global Ship 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 Ship 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 Ship 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 Ship i.e., Global Ship and Fortress Transp go up and down completely randomly.

Pair Corralation between Global Ship and Fortress Transp

Considering the 90-day investment horizon Global Ship Lease is expected to generate 0.2 times more return on investment than Fortress Transp. However, Global Ship Lease is 5.01 times less risky than Fortress Transp. It trades about 0.03 of its potential returns per unit of risk. Fortress Transp Infra is currently generating about -0.02 per unit of risk. If you would invest  2,146  in Global Ship Lease on November 28, 2024 and sell it today you would earn a total of  50.00  from holding Global Ship Lease or generate 2.33% return on investment over 90 days.

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

Global Ship Lease  vs.  Fortress Transp Infra

Global Ship Lease

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Global Ship Lease are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Global Ship is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Fortress Transp Infra

Risk-Adjusted Performance

Very Weak

Over the last 90 days Fortress Transp Infra has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's basic indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Pair Trading with Global Ship and Fortress Transp

The main advantage of trading using opposite Global Ship and Fortress Transp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Ship 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 Ship 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.

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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.