Correlation Between We Buy and Fortress Income

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

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

Diversification Opportunities for We Buy and Fortress Income

0.0

Correlation Coefficient

We Buy  Fortress Income

Pay attention - limited upside

The 3 months correlation between WBC and Fortress is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding We Buy Cars and Fortress Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fortress Income and We Buy 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 We Buy Cars 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 We Buy i.e., We Buy and Fortress Income go up and down completely randomly.

Pair Corralation between We Buy and Fortress Income

Assuming the 90 days trading horizon We Buy Cars is expected to generate 1.61 times more return on investment than Fortress Income. However, We Buy is 1.61 times more volatile than Fortress Income. It trades about 0.3 of its potential returns per unit of risk. Fortress Income is currently generating about 0.03 per unit of risk. If you would invest  302,347  in We Buy Cars on October 6, 2024 and sell it today you would earn a total of  125,853  from holding We Buy Cars or generate 41.63% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

We Buy Cars  vs.  Fortress Income

We Buy Cars

Risk-Adjusted Performance

23 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in We Buy Cars are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, We Buy exhibited solid returns over the last few months and may actually be approaching a breakup point.

Fortress Income

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Fortress Income are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. 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 We Buy and Fortress Income

The main advantage of trading using opposite We Buy and Fortress Income positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if We Buy 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 We Buy Cars 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.

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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.