Correlation Between Frontier Mfg and Commodities Strategy
Can any of the company-specific risk be diversified away by investing in both Frontier Mfg and Commodities Strategy 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 Commodities Strategy 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 Commodities Strategy Fund, you can compare the effects of market volatilities on Frontier Mfg and Commodities Strategy 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 Commodities Strategy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Frontier Mfg and Commodities Strategy.
Diversification Opportunities for Frontier Mfg and Commodities Strategy
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Frontier and Commodities is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Frontier Mfg Global and Commodities Strategy Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Commodities Strategy 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 Commodities Strategy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Commodities Strategy has no effect on the direction of Frontier Mfg i.e., Frontier Mfg and Commodities Strategy go up and down completely randomly.
Pair Corralation between Frontier Mfg and Commodities Strategy
Assuming the 90 days horizon Frontier Mfg Global is expected to under-perform the Commodities Strategy. But the mutual fund apears to be less risky and, when comparing its historical volatility, Frontier Mfg Global is 1.36 times less risky than Commodities Strategy. The mutual fund trades about -0.05 of its potential returns per unit of risk. The Commodities Strategy Fund is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 2,956 in Commodities Strategy Fund on October 24, 2024 and sell it today you would earn a total of 200.00 from holding Commodities Strategy Fund or generate 6.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 98.78% |
| Values | Daily Returns |
Frontier Mfg Global vs. Commodities Strategy Fund
Performance |
| Timeline |
| Frontier Mfg Global |
| Commodities Strategy |
Frontier Mfg and Commodities Strategy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Frontier Mfg and Commodities Strategy
The main advantage of trading using opposite Frontier Mfg and Commodities Strategy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Frontier Mfg position performs unexpectedly, Commodities Strategy 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 Commodities Strategy will offset losses from the drop in Commodities Strategy's long position.| Frontier Mfg vs. Commodities Strategy Fund | Frontier Mfg vs. T Rowe Price | Frontier Mfg vs. Ultranasdaq 100 Profund Ultranasdaq 100 | Frontier Mfg vs. Ab Small Cap |
| Commodities Strategy vs. Basic Materials Fund | Commodities Strategy vs. Energy Services Fund | Commodities Strategy vs. Energy Fund Investor | Commodities Strategy vs. Real Estate Fund |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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