Correlation Between Real Estate and Frontier Mfg

Can any of the company-specific risk be diversified away by investing in both Real Estate 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 Real Estate and Frontier Mfg into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Real Estate Fund and Frontier Mfg E, you can compare the effects of market volatilities on Real Estate 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 Real Estate with a short position of Frontier Mfg. Check out your portfolio center. Please also check ongoing floating volatility patterns of Real Estate and Frontier Mfg.

Diversification Opportunities for Real Estate and Frontier Mfg

0.49

Correlation Coefficient

Real Estate  Frontier Mfg

Very weak diversification

The 3 months correlation between Real and Frontier is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Real Estate Fund 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 Real Estate 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 Real Estate Fund 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 Real Estate i.e., Real Estate and Frontier Mfg go up and down completely randomly.

Pair Corralation between Real Estate and Frontier Mfg

Assuming the 90 days horizon Real Estate is expected to generate 5.03 times less return on investment than Frontier Mfg. In addition to that, Real Estate is 1.53 times more volatile than Frontier Mfg E. It trades about 0.02 of its total potential returns per unit of risk. Frontier Mfg E is currently generating about 0.18 per unit of volatility. If you would invest  1,421  in Frontier Mfg E on December 29, 2024 and sell it today you would earn a total of  111.00  from holding Frontier Mfg E or generate 7.81% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Real Estate Fund  vs.  Frontier Mfg E

Real Estate Fund

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Real Estate Fund are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Real Estate is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Frontier Mfg E

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Frontier Mfg E are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Frontier Mfg may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Real Estate and Frontier Mfg

The main advantage of trading using opposite Real Estate and Frontier Mfg positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Real Estate 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.

The idea behind Real Estate Fund and Frontier Mfg E pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.