Correlation Between Fortress Biotech and Aileron Therapeutics
Can any of the company-specific risk be diversified away by investing in both Fortress Biotech and Aileron Therapeutics 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 Fortress Biotech and Aileron Therapeutics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fortress Biotech and Aileron Therapeutics, you can compare the effects of market volatilities on Fortress Biotech and Aileron Therapeutics 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 Fortress Biotech with a short position of Aileron Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fortress Biotech and Aileron Therapeutics.
Diversification Opportunities for Fortress Biotech and Aileron Therapeutics
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Fortress and Aileron is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Fortress Biotech and Aileron Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aileron Therapeutics and Fortress Biotech 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 Fortress Biotech are associated (or correlated) with Aileron Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aileron Therapeutics has no effect on the direction of Fortress Biotech i.e., Fortress Biotech and Aileron Therapeutics go up and down completely randomly.
Pair Corralation between Fortress Biotech and Aileron Therapeutics
Given the investment horizon of 90 days Fortress Biotech is expected to generate 1.26 times more return on investment than Aileron Therapeutics. However, Fortress Biotech is 1.26 times more volatile than Aileron Therapeutics. It trades about 0.17 of its potential returns per unit of risk. Aileron Therapeutics is currently generating about -0.53 per unit of risk. If you would invest 170.00 in Fortress Biotech on September 13, 2024 and sell it today you would earn a total of 36.00 from holding Fortress Biotech or generate 21.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fortress Biotech vs. Aileron Therapeutics
Performance |
| Timeline |
| Fortress Biotech |
| Aileron Therapeutics |
Fortress Biotech and Aileron Therapeutics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fortress Biotech and Aileron Therapeutics
The main advantage of trading using opposite Fortress Biotech and Aileron Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fortress Biotech position performs unexpectedly, Aileron Therapeutics 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 Aileron Therapeutics will offset losses from the drop in Aileron Therapeutics' long position.| Fortress Biotech vs. Mustang Bio | Fortress Biotech vs. Achilles Therapeutics PLC | Fortress Biotech vs. Aptose Biosciences | Fortress Biotech vs. Fortress Biotech Pref |
| Aileron Therapeutics vs. Bio Path Holdings | Aileron Therapeutics vs. Benitec Biopharma Ltd | Aileron Therapeutics vs. Artelo Biosciences | Aileron Therapeutics vs. Histogen |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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