Correlation Between Fortress Biotech and FAT Brands
Can any of the company-specific risk be diversified away by investing in both Fortress Biotech and FAT Brands 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 FAT Brands into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fortress Biotech Pref and FAT Brands, you can compare the effects of market volatilities on Fortress Biotech and FAT Brands 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 FAT Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fortress Biotech and FAT Brands.
Diversification Opportunities for Fortress Biotech and FAT Brands
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Fortress and FAT is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Fortress Biotech Pref and FAT Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FAT Brands 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 Pref are associated (or correlated) with FAT Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FAT Brands has no effect on the direction of Fortress Biotech i.e., Fortress Biotech and FAT Brands go up and down completely randomly.
Pair Corralation between Fortress Biotech and FAT Brands
Assuming the 90 days horizon Fortress Biotech Pref is expected to under-perform the FAT Brands. In addition to that, Fortress Biotech is 2.31 times more volatile than FAT Brands. It trades about -0.38 of its total potential returns per unit of risk. FAT Brands is currently generating about 0.11 per unit of volatility. If you would invest 932.00 in FAT Brands on August 28, 2024 and sell it today you would earn a total of 22.00 from holding FAT Brands or generate 2.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fortress Biotech Pref vs. FAT Brands
Performance |
| Timeline |
| Fortress Biotech Pref |
| FAT Brands |
Fortress Biotech and FAT Brands Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fortress Biotech and FAT Brands
The main advantage of trading using opposite Fortress Biotech and FAT Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fortress Biotech position performs unexpectedly, FAT Brands 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 FAT Brands will offset losses from the drop in FAT Brands' long position.| Fortress Biotech vs. Checkpoint Therapeutics | Fortress Biotech vs. Mustang Bio | Fortress Biotech vs. Reviva Pharmaceuticals Holdings | Fortress Biotech vs. Kodiak Sciences |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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