Correlation Between Frontier Transport and Investec Limited
Can any of the company-specific risk be diversified away by investing in both Frontier Transport and Investec Limited 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 Investec Limited 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 Investec Limited NON, you can compare the effects of market volatilities on Frontier Transport and Investec Limited 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 Investec Limited. Check out your portfolio center. Please also check ongoing floating volatility patterns of Frontier Transport and Investec Limited.
Diversification Opportunities for Frontier Transport and Investec Limited
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between Frontier and Investec is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Frontier Transport Holdings and Investec Limited NON in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Investec Limited NON 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 Investec Limited. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Investec Limited NON has no effect on the direction of Frontier Transport i.e., Frontier Transport and Investec Limited go up and down completely randomly.
Pair Corralation between Frontier Transport and Investec Limited
Assuming the 90 days trading horizon Frontier Transport Holdings is expected to under-perform the Investec Limited. In addition to that, Frontier Transport is 6.67 times more volatile than Investec Limited NON. It trades about -0.02 of its total potential returns per unit of risk. Investec Limited NON is currently generating about -0.13 per unit of volatility. If you would invest 938,000 in Investec Limited NON on September 4, 2024 and sell it today you would lose (23,000) from holding Investec Limited NON or give up 2.45% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Frontier Transport Holdings vs. Investec Limited NON
Performance |
Timeline |
Frontier Transport |
Investec Limited NON |
Frontier Transport and Investec Limited Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Frontier Transport and Investec Limited
The main advantage of trading using opposite Frontier Transport and Investec Limited positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Frontier Transport position performs unexpectedly, Investec Limited 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 Investec Limited will offset losses from the drop in Investec Limited's long position.Frontier Transport vs. HomeChoice Investments | Frontier Transport vs. Hosken Consolidated Investments | Frontier Transport vs. Life Healthcare | Frontier Transport vs. Datatec |
Investec Limited vs. Frontier Transport Holdings | Investec Limited vs. Bytes Technology | Investec Limited vs. Brimstone Investment | Investec Limited vs. AfroCentric Investment Corp |
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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