Correlation Between City Lodge and Frontier Transport
Can any of the company-specific risk be diversified away by investing in both City Lodge and Frontier Transport 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 City Lodge and Frontier Transport into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between City Lodge Hotels and Frontier Transport Holdings, you can compare the effects of market volatilities on City Lodge and Frontier Transport 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 City Lodge with a short position of Frontier Transport. Check out your portfolio center. Please also check ongoing floating volatility patterns of City Lodge and Frontier Transport.
Diversification Opportunities for City Lodge and Frontier Transport
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between City and Frontier is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding City Lodge Hotels and Frontier Transport Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Frontier Transport and City Lodge 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 City Lodge Hotels are associated (or correlated) with Frontier Transport. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Frontier Transport has no effect on the direction of City Lodge i.e., City Lodge and Frontier Transport go up and down completely randomly.
Pair Corralation between City Lodge and Frontier Transport
Assuming the 90 days trading horizon City Lodge is expected to generate 1.36 times less return on investment than Frontier Transport. But when comparing it to its historical volatility, City Lodge Hotels is 4.36 times less risky than Frontier Transport. It trades about 0.07 of its potential returns per unit of risk. Frontier Transport Holdings is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 79,400 in Frontier Transport Holdings on August 31, 2024 and sell it today you would lose (500.00) from holding Frontier Transport Holdings or give up 0.63% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
City Lodge Hotels vs. Frontier Transport Holdings
Performance |
| Timeline |
| City Lodge Hotels |
| Frontier Transport |
City Lodge and Frontier Transport Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with City Lodge and Frontier Transport
The main advantage of trading using opposite City Lodge and Frontier Transport positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if City Lodge position performs unexpectedly, Frontier Transport 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 Transport will offset losses from the drop in Frontier Transport's long position.| City Lodge vs. Astral Foods | City Lodge vs. Copper 360 | City Lodge vs. Harmony Gold Mining | City Lodge vs. RCL Foods |
| Frontier Transport vs. Reinet Investments SCA | Frontier Transport vs. RCL Foods | Frontier Transport vs. Astral Foods | Frontier Transport vs. Trematon Capital Investments |
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 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.
Other Complementary Tools
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format |