Correlation Between IHS Holding and Frontier Communications
Can any of the company-specific risk be diversified away by investing in both IHS Holding and Frontier Communications 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 IHS Holding and Frontier Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IHS Holding and Frontier Communications Parent, you can compare the effects of market volatilities on IHS Holding and Frontier Communications 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 IHS Holding with a short position of Frontier Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of IHS Holding and Frontier Communications.
Diversification Opportunities for IHS Holding and Frontier Communications
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between IHS and Frontier is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding IHS Holding and Frontier Communications Parent in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Frontier Communications and IHS Holding 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 IHS Holding are associated (or correlated) with Frontier Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Frontier Communications has no effect on the direction of IHS Holding i.e., IHS Holding and Frontier Communications go up and down completely randomly.
Pair Corralation between IHS Holding and Frontier Communications
Considering the 90-day investment horizon IHS Holding is expected to generate 2.65 times less return on investment than Frontier Communications. In addition to that, IHS Holding is 1.11 times more volatile than Frontier Communications Parent. It trades about 0.03 of its total potential returns per unit of risk. Frontier Communications Parent is currently generating about 0.08 per unit of volatility. If you would invest 2,368 in Frontier Communications Parent on August 27, 2024 and sell it today you would earn a total of 1,119 from holding Frontier Communications Parent or generate 47.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
IHS Holding vs. Frontier Communications Parent
Performance |
| Timeline |
| IHS Holding |
| Frontier Communications |
IHS Holding and Frontier Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IHS Holding and Frontier Communications
The main advantage of trading using opposite IHS Holding and Frontier Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IHS Holding position performs unexpectedly, Frontier Communications 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 Frontier Communications will offset losses from the drop in Frontier Communications' long position.| IHS Holding vs. Cogent Communications Group | IHS Holding vs. IDT Corporation | IHS Holding vs. Iridium Communications | IHS Holding vs. Cable One |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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