Correlation Between Frontier Group and Bt Brands
Can any of the company-specific risk be diversified away by investing in both Frontier Group and Bt Brands 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 Group and Bt Brands into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Frontier Group Holdings and Bt Brands, you can compare the effects of market volatilities on Frontier Group and Bt Brands 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 Group with a short position of Bt Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of Frontier Group and Bt Brands.
Diversification Opportunities for Frontier Group and Bt Brands
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Frontier and BTBD is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Frontier Group Holdings and Bt Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bt Brands and Frontier Group 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 Group Holdings are associated (or correlated) with Bt Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bt Brands has no effect on the direction of Frontier Group i.e., Frontier Group and Bt Brands go up and down completely randomly.
Pair Corralation between Frontier Group and Bt Brands
Given the investment horizon of 90 days Frontier Group Holdings is expected to generate 0.87 times more return on investment than Bt Brands. However, Frontier Group Holdings is 1.15 times less risky than Bt Brands. It trades about 0.03 of its potential returns per unit of risk. Bt Brands is currently generating about 0.02 per unit of risk. If you would invest 732.00 in Frontier Group Holdings on November 4, 2024 and sell it today you would earn a total of 111.00 from holding Frontier Group Holdings or generate 15.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Frontier Group Holdings vs. Bt Brands
Performance |
| Timeline |
| Frontier Group Holdings |
| Bt Brands |
Frontier Group and Bt Brands Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Frontier Group and Bt Brands
The main advantage of trading using opposite Frontier Group and Bt Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Frontier Group position performs unexpectedly, Bt Brands 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 Bt Brands will offset losses from the drop in Bt Brands' long position.| Frontier Group vs. JetBlue Airways Corp | Frontier Group vs. Southwest Airlines | Frontier Group vs. United Airlines Holdings | Frontier Group vs. American Airlines Group |
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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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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