Correlation Between Frontier Investment and Coliseum Acquisition
Can any of the company-specific risk be diversified away by investing in both Frontier Investment and Coliseum Acquisition 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 Coliseum Acquisition 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 Coliseum Acquisition Corp, you can compare the effects of market volatilities on Frontier Investment and Coliseum Acquisition 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 Coliseum Acquisition. Check out your portfolio center. Please also check ongoing floating volatility patterns of Frontier Investment and Coliseum Acquisition.
Diversification Opportunities for Frontier Investment and Coliseum Acquisition
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Frontier and Coliseum is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Frontier Investment Corp and Coliseum Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coliseum Acquisition Corp 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 Coliseum Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coliseum Acquisition Corp has no effect on the direction of Frontier Investment i.e., Frontier Investment and Coliseum Acquisition go up and down completely randomly.
Pair Corralation between Frontier Investment and Coliseum Acquisition
If you would invest 1,109 in Coliseum Acquisition Corp on September 1, 2024 and sell it today you would lose (4.00) from holding Coliseum Acquisition Corp or give up 0.36% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 0.79% |
| Values | Daily Returns |
Frontier Investment Corp vs. Coliseum Acquisition Corp
Performance |
| Timeline |
| Frontier Investment Corp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Coliseum Acquisition Corp |
Frontier Investment and Coliseum Acquisition Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Frontier Investment and Coliseum Acquisition
The main advantage of trading using opposite Frontier Investment and Coliseum Acquisition positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Frontier Investment position performs unexpectedly, Coliseum Acquisition 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 Coliseum Acquisition will offset losses from the drop in Coliseum Acquisition's long position.The idea behind Frontier Investment Corp and Coliseum Acquisition Corp 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.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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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