Correlation Between Frontier Mfg and Guardian Fundamental
Can any of the company-specific risk be diversified away by investing in both Frontier Mfg and Guardian Fundamental 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 Mfg and Guardian Fundamental into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Frontier Mfg Global and Guardian Fundamental Global, you can compare the effects of market volatilities on Frontier Mfg and Guardian Fundamental 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 Mfg with a short position of Guardian Fundamental. Check out your portfolio center. Please also check ongoing floating volatility patterns of Frontier Mfg and Guardian Fundamental.
Diversification Opportunities for Frontier Mfg and Guardian Fundamental
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Frontier and Guardian is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Frontier Mfg Global and Guardian Fundamental Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guardian Fundamental and Frontier Mfg 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 Mfg Global are associated (or correlated) with Guardian Fundamental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guardian Fundamental has no effect on the direction of Frontier Mfg i.e., Frontier Mfg and Guardian Fundamental go up and down completely randomly.
Pair Corralation between Frontier Mfg and Guardian Fundamental
Assuming the 90 days horizon Frontier Mfg is expected to generate 1.03 times less return on investment than Guardian Fundamental. But when comparing it to its historical volatility, Frontier Mfg Global is 1.04 times less risky than Guardian Fundamental. It trades about 0.12 of its potential returns per unit of risk. Guardian Fundamental Global is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 1,292 in Guardian Fundamental Global on September 1, 2024 and sell it today you would earn a total of 118.00 from holding Guardian Fundamental Global or generate 9.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Frontier Mfg Global vs. Guardian Fundamental Global
Performance |
| Timeline |
| Frontier Mfg Global |
| Guardian Fundamental |
Frontier Mfg and Guardian Fundamental Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Frontier Mfg and Guardian Fundamental
The main advantage of trading using opposite Frontier Mfg and Guardian Fundamental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Frontier Mfg position performs unexpectedly, Guardian Fundamental 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 Guardian Fundamental will offset losses from the drop in Guardian Fundamental's long position.| Frontier Mfg vs. Calvert Conservative Allocation | Frontier Mfg vs. Blackrock Conservative Prprdptfinstttnl | Frontier Mfg vs. Oppenheimer International Diversified | Frontier Mfg vs. Adams Diversified Equity |
| Guardian Fundamental vs. Guardian Dividend Growth | Guardian Fundamental vs. Equity Growth Fund | Guardian Fundamental vs. Putnam High Income | Guardian Fundamental vs. Fidelity Advisor Technology |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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