Correlation Between FORTRESS BIOTECHPRFA and Universal Electronics

Can any of the company-specific risk be diversified away by investing in both FORTRESS BIOTECHPRFA and Universal Electronics 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 BIOTECHPRFA and Universal Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between FORTRESS BIOTECHPRFA 25 and Universal Electronics, you can compare the effects of market volatilities on FORTRESS BIOTECHPRFA and Universal Electronics 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 BIOTECHPRFA with a short position of Universal Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of FORTRESS BIOTECHPRFA and Universal Electronics.

Diversification Opportunities for FORTRESS BIOTECHPRFA and Universal Electronics

0.26

Correlation Coefficient

FORTRESS BIOTECHPRFA  Universal Electronics

Modest diversification

The 3 months correlation between FORTRESS and Universal is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding FORTRESS BIOTECHPRFA 25 and Universal Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Universal Electronics and FORTRESS BIOTECHPRFA 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 BIOTECHPRFA 25 are associated (or correlated) with Universal Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Universal Electronics has no effect on the direction of FORTRESS BIOTECHPRFA i.e., FORTRESS BIOTECHPRFA and Universal Electronics go up and down completely randomly.

Pair Corralation between FORTRESS BIOTECHPRFA and Universal Electronics

Assuming the 90 days trading horizon FORTRESS BIOTECHPRFA 25 is expected to generate 1.41 times more return on investment than Universal Electronics. However, FORTRESS BIOTECHPRFA is 1.41 times more volatile than Universal Electronics. It trades about 0.03 of its potential returns per unit of risk. Universal Electronics is currently generating about 0.03 per unit of risk. If you would invest  570.00  in FORTRESS BIOTECHPRFA 25 on May 8, 2025 and sell it today you would earn a total of  15.00  from holding FORTRESS BIOTECHPRFA 25 or generate 2.63% return on investment over 90 days.

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

FORTRESS BIOTECHPRFA 25  vs.  Universal Electronics

FORTRESS BIOTECHPRFA

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in FORTRESS BIOTECHPRFA 25 are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile fundamental drivers, FORTRESS BIOTECHPRFA may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Universal Electronics

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Universal Electronics are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Universal Electronics may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with FORTRESS BIOTECHPRFA and Universal Electronics

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

The idea behind FORTRESS BIOTECHPRFA 25 and Universal Electronics 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.