Correlation Between Dana and Frontier

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

By analyzing existing cross correlation between Dana Inc and Frontier Florida 686, you can compare the effects of market volatilities on Dana and Frontier 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 Dana with a short position of Frontier. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dana and Frontier.

Diversification Opportunities for Dana and Frontier

-0.13

Correlation Coefficient

Dana  Frontier

Good diversification

The 3 months correlation between Dana and Frontier is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Dana Inc and Frontier Florida 686 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Frontier Florida 686 and Dana 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 Dana Inc are associated (or correlated) with Frontier. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Frontier Florida 686 has no effect on the direction of Dana i.e., Dana and Frontier go up and down completely randomly.

Pair Corralation between Dana and Frontier

Considering the 90-day investment horizon Dana is expected to generate 39.51 times less return on investment than Frontier. But when comparing it to its historical volatility, Dana Inc is 18.37 times less risky than Frontier. It trades about 0.02 of its potential returns per unit of risk. Frontier Florida 686 is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  8,938  in Frontier Florida 686 on December 4, 2024 and sell it today you would earn a total of  337.00  from holding Frontier Florida 686 or generate 3.77% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	82.15%
Values	Daily Returns

Dana Inc  vs.  Frontier Florida 686

Dana Inc

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Dana Inc are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Dana displayed solid returns over the last few months and may actually be approaching a breakup point.

Frontier Florida 686

Risk-Adjusted Performance

Very Weak

Over the last 90 days Frontier Florida 686 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for Frontier Florida 686 investors.

Pair Trading with Dana and Frontier

The main advantage of trading using opposite Dana and Frontier positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dana position performs unexpectedly, Frontier 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 will offset losses from the drop in Frontier's long position.

The idea behind Dana Inc and Frontier Florida 686 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.