Correlation Between Fortress Transportation and New York
Can any of the company-specific risk be diversified away by investing in both Fortress Transportation and New York 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 New York 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 New York Mortgage, you can compare the effects of market volatilities on Fortress Transportation and New York 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 New York. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fortress Transportation and New York.
Diversification Opportunities for Fortress Transportation and New York
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Fortress and New is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Fortress Transportation and and New York Mortgage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New York Mortgage 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 New York. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New York Mortgage has no effect on the direction of Fortress Transportation i.e., Fortress Transportation and New York go up and down completely randomly.
Pair Corralation between Fortress Transportation and New York
Assuming the 90 days horizon Fortress Transportation is expected to generate 5.29 times less return on investment than New York. But when comparing it to its historical volatility, Fortress Transportation and is 17.58 times less risky than New York. It trades about 0.41 of its potential returns per unit of risk. New York Mortgage is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 2,475 in New York Mortgage on August 28, 2024 and sell it today you would earn a total of 18.00 from holding New York Mortgage or generate 0.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 28.57% |
| Values | Daily Returns |
Fortress Transportation and vs. New York Mortgage
Performance |
| Timeline |
| Fortress Transportation |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
OK
| New York Mortgage |
Fortress Transportation and New York Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fortress Transportation and New York
The main advantage of trading using opposite Fortress Transportation and New York positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fortress Transportation position performs unexpectedly, New York 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 New York will offset losses from the drop in New York's long position.| Fortress Transportation vs. Fortress Transportation and | Fortress Transportation vs. Fortress Transportation and | Fortress Transportation vs. Compass Diversified | Fortress Transportation vs. SiriusPoint |
| New York vs. New York Mortgage | New York vs. AGNC Investment Corp | New York vs. Chimera Investment | New York vs. AGNC Investment Corp |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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