Correlation Between Sibanye Stillwater and Fortress Income

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

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

Diversification Opportunities for Sibanye Stillwater and Fortress Income

-0.41

Correlation Coefficient

Sibanye Stillwater  Fortress Income

Very good diversification

The 3 months correlation between Sibanye and Fortress is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Sibanye Stillwater and Fortress Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fortress Income and Sibanye Stillwater 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 Sibanye Stillwater 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 Sibanye Stillwater i.e., Sibanye Stillwater and Fortress Income go up and down completely randomly.

Pair Corralation between Sibanye Stillwater and Fortress Income

Assuming the 90 days trading horizon Sibanye Stillwater is expected to under-perform the Fortress Income. In addition to that, Sibanye Stillwater is 3.4 times more volatile than Fortress Income. It trades about -0.15 of its total potential returns per unit of risk. Fortress Income is currently generating about 0.28 per unit of volatility. If you would invest  193,000  in Fortress Income on September 25, 2024 and sell it today you would earn a total of  9,500  from holding Fortress Income or generate 4.92% return on investment over 90 days.

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

Sibanye Stillwater  vs.  Fortress Income

Sibanye Stillwater

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sibanye Stillwater has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains 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 Sibanye Stillwater and Fortress Income

The main advantage of trading using opposite Sibanye Stillwater and Fortress Income positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sibanye Stillwater 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 Sibanye Stillwater 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.