Correlation Between Vertiv Holdings and FORTUNE

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Can any of the company-specific risk be diversified away by investing in both Vertiv Holdings and FORTUNE 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 Vertiv Holdings and FORTUNE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vertiv Holdings Co and FORTUNE BRANDS INC, you can compare the effects of market volatilities on Vertiv Holdings and FORTUNE 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 Vertiv Holdings with a short position of FORTUNE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vertiv Holdings and FORTUNE.

Diversification Opportunities for Vertiv Holdings and FORTUNE

0.39
  Correlation Coefficient

Weak diversification

The 3 months correlation between Vertiv and FORTUNE is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Vertiv Holdings Co and FORTUNE BRANDS INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FORTUNE BRANDS INC and Vertiv Holdings 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 Vertiv Holdings Co are associated (or correlated) with FORTUNE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FORTUNE BRANDS INC has no effect on the direction of Vertiv Holdings i.e., Vertiv Holdings and FORTUNE go up and down completely randomly.

Pair Corralation between Vertiv Holdings and FORTUNE

Considering the 90-day investment horizon Vertiv Holdings Co is expected to generate 3.31 times more return on investment than FORTUNE. However, Vertiv Holdings is 3.31 times more volatile than FORTUNE BRANDS INC. It trades about 0.15 of its potential returns per unit of risk. FORTUNE BRANDS INC is currently generating about -0.01 per unit of risk. If you would invest  1,362  in Vertiv Holdings Co on August 30, 2024 and sell it today you would earn a total of  11,332  from holding Vertiv Holdings Co or generate 832.01% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy39.39%
ValuesDaily Returns

Vertiv Holdings Co  vs.  FORTUNE BRANDS INC

 Performance 
       Timeline  
Vertiv Holdings 

Risk-Adjusted Performance

16 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Vertiv Holdings Co are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Vertiv Holdings unveiled solid returns over the last few months and may actually be approaching a breakup point.
FORTUNE BRANDS INC 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days FORTUNE BRANDS INC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Bond's basic indicators remain somewhat strong which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long term up-swing for FORTUNE BRANDS INC investors.

Vertiv Holdings and FORTUNE Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Vertiv Holdings and FORTUNE

The main advantage of trading using opposite Vertiv Holdings and FORTUNE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vertiv Holdings position performs unexpectedly, FORTUNE 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 FORTUNE will offset losses from the drop in FORTUNE's long position.
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The idea behind Vertiv Holdings Co and FORTUNE BRANDS INC pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.

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