Correlation Between Capitec Bank and Frontier Transport
Can any of the company-specific risk be diversified away by investing in both Capitec Bank 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 Capitec Bank and Frontier Transport into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Capitec Bank Holdings and Frontier Transport Holdings, you can compare the effects of market volatilities on Capitec Bank 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 Capitec Bank with a short position of Frontier Transport. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capitec Bank and Frontier Transport.
Diversification Opportunities for Capitec Bank and Frontier Transport
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between Capitec and Frontier is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Capitec Bank Holdings and Frontier Transport Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Frontier Transport and Capitec Bank 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 Capitec Bank Holdings 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 Capitec Bank i.e., Capitec Bank and Frontier Transport go up and down completely randomly.
Pair Corralation between Capitec Bank and Frontier Transport
Assuming the 90 days trading horizon Capitec Bank Holdings is expected to generate 0.39 times more return on investment than Frontier Transport. However, Capitec Bank Holdings is 2.57 times less risky than Frontier Transport. It trades about 0.19 of its potential returns per unit of risk. Frontier Transport Holdings is currently generating about 0.04 per unit of risk. If you would invest 19,755,500 in Capitec Bank Holdings on August 27, 2024 and sell it today you would earn a total of 13,862,700 from holding Capitec Bank Holdings or generate 70.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Capitec Bank Holdings vs. Frontier Transport Holdings
Performance |
| Timeline |
| Capitec Bank Holdings |
| Frontier Transport |
Capitec Bank and Frontier Transport Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Capitec Bank and Frontier Transport
The main advantage of trading using opposite Capitec Bank and Frontier Transport positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capitec Bank 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.| Capitec Bank vs. Deneb Investments | Capitec Bank vs. CA Sales Holdings | Capitec Bank vs. Zeder Investments | Capitec Bank vs. Afine Investments |
| Frontier Transport vs. Centaur Bci Balanced | Frontier Transport vs. Growthpoint Properties | Frontier Transport vs. Bowler Metcalf | Frontier Transport vs. Shoprite Holdings |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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