Correlation Between Life Healthcare and Fortress Income
Can any of the company-specific risk be diversified away by investing in both Life Healthcare 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 Life Healthcare and Fortress Income into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Life Healthcare and Fortress Income, you can compare the effects of market volatilities on Life Healthcare 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 Life Healthcare with a short position of Fortress Income. Check out your portfolio center. Please also check ongoing floating volatility patterns of Life Healthcare and Fortress Income.
Diversification Opportunities for Life Healthcare and Fortress Income
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between Life and Fortress is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Life Healthcare and Fortress Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fortress Income and Life Healthcare 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 Life Healthcare 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 Life Healthcare i.e., Life Healthcare and Fortress Income go up and down completely randomly.
Pair Corralation between Life Healthcare and Fortress Income
Assuming the 90 days trading horizon Life Healthcare is expected to under-perform the Fortress Income. In addition to that, Life Healthcare is 1.33 times more volatile than Fortress Income. It trades about -0.25 of its total potential returns per unit of risk. Fortress Income is currently generating about 0.06 per unit of volatility. If you would invest 200,000 in Fortress Income on October 4, 2024 and sell it today you would earn a total of 1,600 from holding Fortress Income or generate 0.8% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Life Healthcare vs. Fortress Income
Performance |
Timeline |
Life Healthcare |
Fortress Income |
Life Healthcare and Fortress Income Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Life Healthcare and Fortress Income
The main advantage of trading using opposite Life Healthcare and Fortress Income positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Life Healthcare 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.Life Healthcare vs. AfroCentric Investment Corp | Life Healthcare vs. Sabvest Capital | Life Healthcare vs. Growthpoint Properties | Life Healthcare vs. Kap Industrial Holdings |
Fortress Income vs. Frontier Transport Holdings | Fortress Income vs. Astoria Investments | Fortress Income vs. We Buy Cars | Fortress Income vs. Deneb Investments |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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