Correlation Between Frontier Transport and Allied Electronics
Can any of the company-specific risk be diversified away by investing in both Frontier Transport and Allied Electronics 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 Transport and Allied Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Frontier Transport Holdings and Allied Electronics, you can compare the effects of market volatilities on Frontier Transport and Allied Electronics 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 Transport with a short position of Allied Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Frontier Transport and Allied Electronics.
Diversification Opportunities for Frontier Transport and Allied Electronics
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between Frontier and Allied is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Frontier Transport Holdings and Allied Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allied Electronics and Frontier Transport 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 Transport Holdings are associated (or correlated) with Allied Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allied Electronics has no effect on the direction of Frontier Transport i.e., Frontier Transport and Allied Electronics go up and down completely randomly.
Pair Corralation between Frontier Transport and Allied Electronics
Assuming the 90 days trading horizon Frontier Transport Holdings is expected to generate 1.55 times more return on investment than Allied Electronics. However, Frontier Transport is 1.55 times more volatile than Allied Electronics. It trades about 0.06 of its potential returns per unit of risk. Allied Electronics is currently generating about 0.08 per unit of risk. If you would invest 35,545 in Frontier Transport Holdings on August 28, 2024 and sell it today you would earn a total of 37,355 from holding Frontier Transport Holdings or generate 105.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Frontier Transport Holdings vs. Allied Electronics
Performance |
| Timeline |
| Frontier Transport |
| Allied Electronics |
Frontier Transport and Allied Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Frontier Transport and Allied Electronics
The main advantage of trading using opposite Frontier Transport and Allied Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Frontier Transport position performs unexpectedly, Allied Electronics 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 Allied Electronics will offset losses from the drop in Allied Electronics' long position.| Frontier Transport vs. Centaur Bci Balanced | Frontier Transport vs. Growthpoint Properties | Frontier Transport vs. Bowler Metcalf | Frontier Transport vs. Shoprite Holdings |
| Allied Electronics vs. Centaur Bci Balanced | Allied Electronics vs. Growthpoint Properties | Allied Electronics vs. Bowler Metcalf | Allied Electronics vs. Shoprite Holdings |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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