Correlation Between Frontier Communications and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Frontier Communications and Dow Jones 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 Communications and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Frontier Communications Parent and Dow Jones Industrial, you can compare the effects of market volatilities on Frontier Communications and Dow Jones 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 Communications with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Frontier Communications and Dow Jones.
Diversification Opportunities for Frontier Communications and Dow Jones
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Frontier and Dow is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Frontier Communications Parent and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial and Frontier Communications 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 Communications Parent are associated (or correlated) with Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of Frontier Communications i.e., Frontier Communications and Dow Jones go up and down completely randomly.
Pair Corralation between Frontier Communications and Dow Jones
Given the investment horizon of 90 days Frontier Communications Parent is expected to generate 4.91 times more return on investment than Dow Jones. However, Frontier Communications is 4.91 times more volatile than Dow Jones Industrial. It trades about 0.03 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.08 per unit of risk. If you would invest 2,560 in Frontier Communications Parent on August 24, 2024 and sell it today you would earn a total of 920.00 from holding Frontier Communications Parent or generate 35.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Frontier Communications Parent vs. Dow Jones Industrial
Performance |
| Timeline |
Frontier Communications and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Frontier Communications Parent
Pair trading matchups for Frontier Communications
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Frontier Communications and Dow Jones
The main advantage of trading using opposite Frontier Communications and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Frontier Communications position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' long position.| Frontier Communications vs. Cable One | Frontier Communications vs. Charter Communications | Frontier Communications vs. Liberty Broadband Srs | Frontier Communications vs. ATN International |
| Dow Jones vs. Barrick Gold Corp | Dow Jones vs. Jutal Offshore Oil | Dow Jones vs. Eastern Co | Dow Jones vs. Weyco Group |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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