Correlation Between Frontier Investment and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Frontier Investment and Dow Jones 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 Frontier Investment and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Frontier Investment Corp and Dow Jones Industrial, you can compare the effects of market volatilities on Frontier Investment and Dow Jones 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 Frontier Investment with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Frontier Investment and Dow Jones.
Diversification Opportunities for Frontier Investment and Dow Jones
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between Frontier and Dow is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Frontier Investment Corp and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial and Frontier Investment 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 Frontier Investment Corp are associated (or correlated) with Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of Frontier Investment i.e., Frontier Investment and Dow Jones go up and down completely randomly.
Pair Corralation between Frontier Investment and Dow Jones
Given the investment horizon of 90 days Frontier Investment is expected to generate 1.76 times less return on investment than Dow Jones. But when comparing it to its historical volatility, Frontier Investment Corp is 1.53 times less risky than Dow Jones. It trades about 0.07 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 3,424,593 in Dow Jones Industrial on November 2, 2024 and sell it today you would earn a total of 1,063,620 from holding Dow Jones Industrial or generate 31.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 22.42% |
| Values | Daily Returns |
Frontier Investment Corp vs. Dow Jones Industrial
Performance |
| Timeline |
Frontier Investment and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Frontier Investment Corp
Pair trading matchups for Frontier Investment
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Frontier Investment and Dow Jones
The main advantage of trading using opposite Frontier Investment and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Frontier Investment position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' long position.| Frontier Investment vs. Broad Capital Acquisition | Frontier Investment vs. AlphaTime Acquisition Corp | Frontier Investment vs. Manaris Corp |
| Dow Jones vs. Cincinnati Financial | Dow Jones vs. Kellanova | Dow Jones vs. Acme United | Dow Jones vs. Procter Gamble |
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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