Correlation Between Frontier Transport and British Amer
Can any of the company-specific risk be diversified away by investing in both Frontier Transport and British Amer 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 British Amer 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 British American Tobacco, you can compare the effects of market volatilities on Frontier Transport and British Amer 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 British Amer. Check out your portfolio center. Please also check ongoing floating volatility patterns of Frontier Transport and British Amer.
Diversification Opportunities for Frontier Transport and British Amer
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Frontier and British is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Frontier Transport Holdings and British American Tobacco in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on British American Tobacco 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 British Amer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of British American Tobacco has no effect on the direction of Frontier Transport i.e., Frontier Transport and British Amer go up and down completely randomly.
Pair Corralation between Frontier Transport and British Amer
Assuming the 90 days trading horizon Frontier Transport Holdings is expected to under-perform the British Amer. In addition to that, Frontier Transport is 4.98 times more volatile than British American Tobacco. It trades about -0.06 of its total potential returns per unit of risk. British American Tobacco is currently generating about 0.44 per unit of volatility. If you would invest 6,154,700 in British American Tobacco on August 28, 2024 and sell it today you would earn a total of 609,600 from holding British American Tobacco or generate 9.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Frontier Transport Holdings vs. British American Tobacco
Performance |
| Timeline |
| Frontier Transport |
| British American Tobacco |
Frontier Transport and British Amer Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Frontier Transport and British Amer
The main advantage of trading using opposite Frontier Transport and British Amer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Frontier Transport position performs unexpectedly, British Amer 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 British Amer will offset losses from the drop in British Amer's long position.| Frontier Transport vs. Centaur Bci Balanced | Frontier Transport vs. Growthpoint Properties | Frontier Transport vs. Bowler Metcalf | Frontier Transport vs. Shoprite Holdings |
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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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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