Correlation Between Steel Partners and FTAI Infrastructure

Can any of the company-specific risk be diversified away by investing in both Steel Partners and FTAI Infrastructure 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 Steel Partners and FTAI Infrastructure into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Steel Partners and FTAI Infrastructure

-0.9

Correlation Coefficient

Steel Partners  FTAI Infrastructure

Pay attention - limited upside

The 3 months correlation between Steel and FTAI is -0.9. Overlapping area represents the amount of risk that can be diversified away by holding Steel Partners Holdings and FTAI Infrastructure in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FTAI Infrastructure and Steel Partners 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 Steel Partners Holdings are associated (or correlated) with FTAI Infrastructure. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FTAI Infrastructure has no effect on the direction of Steel Partners i.e., Steel Partners and FTAI Infrastructure go up and down completely randomly.

Pair Corralation between Steel Partners and FTAI Infrastructure

Assuming the 90 days trading horizon Steel Partners Holdings is expected to generate 0.07 times more return on investment than FTAI Infrastructure. However, Steel Partners Holdings is 14.33 times less risky than FTAI Infrastructure. It trades about 0.14 of its potential returns per unit of risk. FTAI Infrastructure is currently generating about -0.16 per unit of risk. If you would invest  2,396  in Steel Partners Holdings on December 28, 2024 and sell it today you would earn a total of  53.00  from holding Steel Partners Holdings or generate 2.21% return on investment over 90 days.

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

Steel Partners Holdings  vs.  FTAI Infrastructure

Steel Partners Holdings

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Steel Partners Holdings are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Steel Partners is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

FTAI Infrastructure

Risk-Adjusted Performance

Very Weak

Over the last 90 days FTAI Infrastructure has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's forward indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Steel Partners and FTAI Infrastructure

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

The idea behind Steel Partners Holdings and FTAI Infrastructure 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.