Correlation Between Plexus Corp and Fortrea Holdings

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

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

Diversification Opportunities for Plexus Corp and Fortrea Holdings

0.61

Correlation Coefficient

Plexus Corp  Fortrea Holdings

Poor diversification

The 3 months correlation between Plexus and Fortrea is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Plexus Corp and Fortrea Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fortrea Holdings and Plexus Corp 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 Plexus Corp are associated (or correlated) with Fortrea Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fortrea Holdings has no effect on the direction of Plexus Corp i.e., Plexus Corp and Fortrea Holdings go up and down completely randomly.

Pair Corralation between Plexus Corp and Fortrea Holdings

Given the investment horizon of 90 days Plexus Corp is expected to generate 0.33 times more return on investment than Fortrea Holdings. However, Plexus Corp is 3.06 times less risky than Fortrea Holdings. It trades about -0.21 of its potential returns per unit of risk. Fortrea Holdings is currently generating about -0.19 per unit of risk. If you would invest  16,794  in Plexus Corp on October 10, 2024 and sell it today you would lose (822.00) from holding Plexus Corp or give up 4.89% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.24%
Values	Daily Returns

Plexus Corp  vs.  Fortrea Holdings

Plexus Corp

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Plexus Corp are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Plexus Corp unveiled solid returns over the last few months and may actually be approaching a breakup point.

Fortrea Holdings

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Fortrea Holdings are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating basic indicators, Fortrea Holdings may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Plexus Corp and Fortrea Holdings

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

The idea behind Plexus Corp and Fortrea Holdings 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.