Correlation Between Frontier Communications and Millicom International
Can any of the company-specific risk be diversified away by investing in both Frontier Communications and Millicom International 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 Millicom International 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 Millicom International Cellular, you can compare the effects of market volatilities on Frontier Communications and Millicom International 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 Millicom International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Frontier Communications and Millicom International.
Diversification Opportunities for Frontier Communications and Millicom International
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Frontier and Millicom is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Frontier Communications Parent and Millicom International Cellula in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Millicom International 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 Millicom International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Millicom International has no effect on the direction of Frontier Communications i.e., Frontier Communications and Millicom International go up and down completely randomly.
Pair Corralation between Frontier Communications and Millicom International
Given the investment horizon of 90 days Frontier Communications Parent is expected to generate 1.79 times more return on investment than Millicom International. However, Frontier Communications is 1.79 times more volatile than Millicom International Cellular. It trades about 0.03 of its potential returns per unit of risk. Millicom International Cellular is currently generating about 0.05 per unit of risk. If you would invest 2,742 in Frontier Communications Parent on November 9, 2024 and sell it today you would earn a total of 838.00 from holding Frontier Communications Parent or generate 30.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Frontier Communications Parent vs. Millicom International Cellula
Performance |
| Timeline |
| Frontier Communications |
| Millicom International |
Frontier Communications and Millicom International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Frontier Communications and Millicom International
The main advantage of trading using opposite Frontier Communications and Millicom International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Frontier Communications position performs unexpectedly, Millicom International 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 Millicom International will offset losses from the drop in Millicom International's long position.| Frontier Communications vs. Cable One | Frontier Communications vs. Charter Communications | Frontier Communications vs. Liberty Broadband Srs | Frontier Communications vs. ATN International |
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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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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