Correlation Between Fortress Transportation and Ashtead Group
Can any of the company-specific risk be diversified away by investing in both Fortress Transportation and Ashtead Group 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 Ashtead Group 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 Ashtead Group plc, you can compare the effects of market volatilities on Fortress Transportation and Ashtead Group 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 Ashtead Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fortress Transportation and Ashtead Group.
Diversification Opportunities for Fortress Transportation and Ashtead Group
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Fortress and Ashtead is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Fortress Transportation and and Ashtead Group plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ashtead Group plc 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 Ashtead Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ashtead Group plc has no effect on the direction of Fortress Transportation i.e., Fortress Transportation and Ashtead Group go up and down completely randomly.
Pair Corralation between Fortress Transportation and Ashtead Group
Assuming the 90 days horizon Fortress Transportation is expected to generate 1.2 times less return on investment than Ashtead Group. But when comparing it to its historical volatility, Fortress Transportation and is 2.17 times less risky than Ashtead Group. It trades about 0.07 of its potential returns per unit of risk. Ashtead Group plc is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 5,734 in Ashtead Group plc on August 30, 2024 and sell it today you would earn a total of 2,251 from holding Ashtead Group plc or generate 39.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 98.59% |
| Values | Daily Returns |
Fortress Transportation and vs. Ashtead Group plc
Performance |
| Timeline |
| Fortress Transportation |
| Ashtead Group plc |
Fortress Transportation and Ashtead Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fortress Transportation and Ashtead Group
The main advantage of trading using opposite Fortress Transportation and Ashtead Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fortress Transportation position performs unexpectedly, Ashtead Group 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 Ashtead Group will offset losses from the drop in Ashtead Group's long position.| Fortress Transportation vs. Fortress Transportation and | Fortress Transportation vs. SiriusPoint | Fortress Transportation vs. New York Mortgage | Fortress Transportation vs. Compass Diversified |
| Ashtead Group vs. African Discovery Group | Ashtead Group vs. Emeco Holdings Limited | Ashtead Group vs. Solution Financial | Ashtead Group vs. BOC Aviation Limited |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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