Correlation Between HomeChoice Investments and Fortress Income

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

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

Diversification Opportunities for HomeChoice Investments and Fortress Income

-0.17

Correlation Coefficient

HomeChoice Investments  Fortress Income

Good diversification

The 3 months correlation between HomeChoice and Fortress is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding HomeChoice Investments and Fortress Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fortress Income and HomeChoice Investments 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 HomeChoice Investments 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 HomeChoice Investments i.e., HomeChoice Investments and Fortress Income go up and down completely randomly.

Pair Corralation between HomeChoice Investments and Fortress Income

Assuming the 90 days trading horizon HomeChoice Investments is expected to generate 2.84 times less return on investment than Fortress Income. But when comparing it to its historical volatility, HomeChoice Investments is 2.53 times less risky than Fortress Income. It trades about 0.07 of its potential returns per unit of risk. Fortress Income is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  67,000  in Fortress Income on September 28, 2024 and sell it today you would earn a total of  134,500  from holding Fortress Income or generate 200.75% return on investment over 90 days.

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

HomeChoice Investments  vs.  Fortress Income

HomeChoice Investments

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days HomeChoice Investments has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm 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 HomeChoice Investments and Fortress Income

The main advantage of trading using opposite HomeChoice Investments and Fortress Income positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HomeChoice Investments 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 HomeChoice Investments 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 Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.