Correlation Between Frontline and 2020 Bulkers
Can any of the company-specific risk be diversified away by investing in both Frontline and 2020 Bulkers 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 Frontline and 2020 Bulkers into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Frontline and 2020 Bulkers, you can compare the effects of market volatilities on Frontline and 2020 Bulkers 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 Frontline with a short position of 2020 Bulkers. Check out your portfolio center. Please also check ongoing floating volatility patterns of Frontline and 2020 Bulkers.
Diversification Opportunities for Frontline and 2020 Bulkers
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Frontline and 2020 is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Frontline and 2020 Bulkers in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 2020 Bulkers and Frontline 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 Frontline are associated (or correlated) with 2020 Bulkers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 2020 Bulkers has no effect on the direction of Frontline i.e., Frontline and 2020 Bulkers go up and down completely randomly.
Pair Corralation between Frontline and 2020 Bulkers
Assuming the 90 days trading horizon Frontline is expected to under-perform the 2020 Bulkers. But the stock apears to be less risky and, when comparing its historical volatility, Frontline is 1.24 times less risky than 2020 Bulkers. The stock trades about -0.03 of its potential returns per unit of risk. The 2020 Bulkers is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 13,137 in 2020 Bulkers on August 25, 2024 and sell it today you would earn a total of 673.00 from holding 2020 Bulkers or generate 5.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Frontline vs. 2020 Bulkers
Performance |
| Timeline |
| Frontline |
| 2020 Bulkers |
Frontline and 2020 Bulkers Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Frontline and 2020 Bulkers
The main advantage of trading using opposite Frontline and 2020 Bulkers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Frontline position performs unexpectedly, 2020 Bulkers 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 2020 Bulkers will offset losses from the drop in 2020 Bulkers' long position.| Frontline vs. Golden Ocean Group | Frontline vs. BW LPG | Frontline vs. FLEX LNG | Frontline vs. Avance Gas Holding |
| 2020 Bulkers vs. Okeanis Eco Tankers | 2020 Bulkers vs. MPC Container Ships | 2020 Bulkers vs. Belships | 2020 Bulkers vs. Hafnia |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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