Correlation Between Fortress Transportation and African Discovery
Can any of the company-specific risk be diversified away by investing in both Fortress Transportation and African Discovery 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 Transportation and African Discovery into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fortress Transportation and and African Discovery Group, you can compare the effects of market volatilities on Fortress Transportation and African Discovery 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 Transportation with a short position of African Discovery. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fortress Transportation and African Discovery.
Diversification Opportunities for Fortress Transportation and African Discovery
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Fortress and African is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Fortress Transportation and and African Discovery Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on African Discovery and Fortress Transportation 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 Transportation and are associated (or correlated) with African Discovery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of African Discovery has no effect on the direction of Fortress Transportation i.e., Fortress Transportation and African Discovery go up and down completely randomly.
Pair Corralation between Fortress Transportation and African Discovery
Assuming the 90 days horizon Fortress Transportation is expected to generate 10.85 times less return on investment than African Discovery. But when comparing it to its historical volatility, Fortress Transportation and is 15.75 times less risky than African Discovery. It trades about 0.07 of its potential returns per unit of risk. African Discovery Group is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 3.20 in African Discovery Group on August 30, 2024 and sell it today you would lose (2.60) from holding African Discovery Group or give up 81.25% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fortress Transportation and vs. African Discovery Group
Performance |
| Timeline |
| Fortress Transportation |
| African Discovery |
Fortress Transportation and African Discovery Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fortress Transportation and African Discovery
The main advantage of trading using opposite Fortress Transportation and African Discovery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fortress Transportation position performs unexpectedly, African Discovery 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 African Discovery will offset losses from the drop in African Discovery's long position.| Fortress Transportation vs. Fortress Transportation and | Fortress Transportation vs. SiriusPoint | Fortress Transportation vs. New York Mortgage | Fortress Transportation vs. Compass Diversified |
| African Discovery vs. United Rentals | African Discovery vs. Ashtead Group plc | African Discovery vs. AerCap Holdings NV | African Discovery vs. Fortress Transp Infra |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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