Correlation Between Dow 2x and Frontier Mfg
Can any of the company-specific risk be diversified away by investing in both Dow 2x and Frontier Mfg 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 Dow 2x and Frontier Mfg into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dow 2x Strategy and Frontier Mfg E, you can compare the effects of market volatilities on Dow 2x and Frontier Mfg 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 Dow 2x with a short position of Frontier Mfg. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow 2x and Frontier Mfg.
Diversification Opportunities for Dow 2x and Frontier Mfg
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Dow and Frontier is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Dow 2x Strategy and Frontier Mfg E in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Frontier Mfg E and Dow 2x 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 Dow 2x Strategy are associated (or correlated) with Frontier Mfg. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Frontier Mfg E has no effect on the direction of Dow 2x i.e., Dow 2x and Frontier Mfg go up and down completely randomly.
Pair Corralation between Dow 2x and Frontier Mfg
Assuming the 90 days horizon Dow 2x Strategy is expected to generate 1.94 times more return on investment than Frontier Mfg. However, Dow 2x is 1.94 times more volatile than Frontier Mfg E. It trades about 0.12 of its potential returns per unit of risk. Frontier Mfg E is currently generating about 0.07 per unit of risk. If you would invest 13,297 in Dow 2x Strategy on September 2, 2024 and sell it today you would earn a total of 6,162 from holding Dow 2x Strategy or generate 46.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dow 2x Strategy vs. Frontier Mfg E
Performance |
| Timeline |
| Dow 2x Strategy |
| Frontier Mfg E |
Dow 2x and Frontier Mfg Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dow 2x and Frontier Mfg
The main advantage of trading using opposite Dow 2x and Frontier Mfg positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow 2x position performs unexpectedly, Frontier Mfg 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 Mfg will offset losses from the drop in Frontier Mfg's long position.| Dow 2x vs. Dow 2x Strategy | Dow 2x vs. Dow 2x Strategy | Dow 2x vs. Nasdaq 100 2x Strategy | Dow 2x vs. Ultramid Cap Profund Ultramid Cap |
| Frontier Mfg vs. Frontier Mfg E | Frontier Mfg vs. Alpine Global Infrastructure | Frontier Mfg vs. Real Estate Fund | Frontier Mfg vs. Lazard Global Listed |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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