Correlation Between Fortress Biotech and VBI Vaccines

Can any of the company-specific risk be diversified away by investing in both Fortress Biotech and VBI Vaccines 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 VBI Vaccines 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 VBI Vaccines, you can compare the effects of market volatilities on Fortress Biotech and VBI Vaccines 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 VBI Vaccines. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fortress Biotech and VBI Vaccines.

Diversification Opportunities for Fortress Biotech and VBI Vaccines

-0.44

Correlation Coefficient

Fortress Biotech  VBI Vaccines

Very good diversification

The 3 months correlation between Fortress and VBI is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Fortress Biotech Pref and VBI Vaccines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VBI Vaccines 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 VBI Vaccines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VBI Vaccines has no effect on the direction of Fortress Biotech i.e., Fortress Biotech and VBI Vaccines go up and down completely randomly.

Pair Corralation between Fortress Biotech and VBI Vaccines

Assuming the 90 days horizon Fortress Biotech Pref is expected to generate 0.14 times more return on investment than VBI Vaccines. However, Fortress Biotech Pref is 7.28 times less risky than VBI Vaccines. It trades about 0.1 of its potential returns per unit of risk. VBI Vaccines is currently generating about -0.04 per unit of risk. If you would invest  532.00  in Fortress Biotech Pref on September 27, 2024 and sell it today you would earn a total of  128.00  from holding Fortress Biotech Pref or generate 24.06% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Fortress Biotech Pref  vs.  VBI Vaccines

Fortress Biotech Pref

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Fortress Biotech Pref are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Fortress Biotech reported solid returns over the last few months and may actually be approaching a breakup point.

VBI Vaccines

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days VBI Vaccines has generated negative risk-adjusted returns adding no value to investors with long positions. Even with uncertain performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Fortress Biotech and VBI Vaccines

The main advantage of trading using opposite Fortress Biotech and VBI Vaccines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fortress Biotech position performs unexpectedly, VBI Vaccines 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 VBI Vaccines will offset losses from the drop in VBI Vaccines' long position.

The idea behind Fortress Biotech Pref and VBI Vaccines 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.

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.