Correlation Between United States and Fortress Transp

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

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

Diversification Opportunities for United States and Fortress Transp

0.65

Correlation Coefficient

United States  Fortress Transp

Poor diversification

The 3 months correlation between United and Fortress is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding United States Steel and Fortress Transp Infra in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fortress Transp Infra and United States 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 United States Steel are associated (or correlated) with Fortress Transp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fortress Transp Infra has no effect on the direction of United States i.e., United States and Fortress Transp go up and down completely randomly.

Pair Corralation between United States and Fortress Transp

Taking into account the 90-day investment horizon United States Steel is expected to under-perform the Fortress Transp. In addition to that, United States is 1.05 times more volatile than Fortress Transp Infra. It trades about -0.03 of its total potential returns per unit of risk. Fortress Transp Infra is currently generating about 0.07 per unit of volatility. If you would invest  10,450  in Fortress Transp Infra on September 29, 2024 and sell it today you would earn a total of  2,261  from holding Fortress Transp Infra or generate 21.64% return on investment over 90 days.

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

United States Steel  vs.  Fortress Transp Infra

United States Steel

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days United States Steel has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Fortress Transp Infra

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fortress Transp Infra has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Fortress Transp is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with United States and Fortress Transp

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

The idea behind United States Steel and Fortress Transp Infra 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.