Correlation Between American High-income and Frontier Mfg
Can any of the company-specific risk be diversified away by investing in both American High-income and Frontier Mfg 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 American High-income and Frontier Mfg into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American High Income Municipal and Frontier Mfg Global, you can compare the effects of market volatilities on American High-income and Frontier Mfg 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 American High-income with a short position of Frontier Mfg. Check out your portfolio center. Please also check ongoing floating volatility patterns of American High-income and Frontier Mfg.
Diversification Opportunities for American High-income and Frontier Mfg
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between American and Frontier is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding American High Income Municipal and Frontier Mfg Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Frontier Mfg Global and American High-income 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 American High Income Municipal are associated (or correlated) with Frontier Mfg. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Frontier Mfg Global has no effect on the direction of American High-income i.e., American High-income and Frontier Mfg go up and down completely randomly.
Pair Corralation between American High-income and Frontier Mfg
Assuming the 90 days horizon American High Income Municipal is expected to generate 0.65 times more return on investment than Frontier Mfg. However, American High Income Municipal is 1.53 times less risky than Frontier Mfg. It trades about 0.2 of its potential returns per unit of risk. Frontier Mfg Global is currently generating about 0.05 per unit of risk. If you would invest 1,536 in American High Income Municipal on September 2, 2024 and sell it today you would earn a total of 21.00 from holding American High Income Municipal or generate 1.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
American High Income Municipal vs. Frontier Mfg Global
Performance |
| Timeline |
| American High Income |
| Frontier Mfg Global |
American High-income and Frontier Mfg Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American High-income and Frontier Mfg
The main advantage of trading using opposite American High-income and Frontier Mfg positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American High-income position performs unexpectedly, Frontier Mfg 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 Frontier Mfg will offset losses from the drop in Frontier Mfg's long position.| American High-income vs. Maryland Tax Free Bond | American High-income vs. T Rowe Price | American High-income vs. Versatile Bond Portfolio | American High-income vs. Blrc Sgy Mnp |
| Frontier Mfg vs. Frontier Mfg E | Frontier Mfg vs. Frontier Mfg E | Frontier Mfg vs. Frontier Mfg Global | Frontier Mfg vs. Calamos Antetokounmpo Sustainable |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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