Correlation Between El Al and Frontier Group

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

By analyzing existing cross correlation between El Al Israel and Frontier Group Holdings, you can compare the effects of market volatilities on El Al and Frontier Group 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 El Al with a short position of Frontier Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of El Al and Frontier Group.

Diversification Opportunities for El Al and Frontier Group

0.01

Correlation Coefficient

El Al  Frontier Group

Significant diversification

The 3 months correlation between ELALF and Frontier is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding El Al Israel and Frontier Group Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Frontier Group Holdings and El Al 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 El Al Israel are associated (or correlated) with Frontier Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Frontier Group Holdings has no effect on the direction of El Al i.e., El Al and Frontier Group go up and down completely randomly.

Pair Corralation between El Al and Frontier Group

Assuming the 90 days horizon El Al Israel is expected to generate 0.58 times more return on investment than Frontier Group. However, El Al Israel is 1.72 times less risky than Frontier Group. It trades about 0.18 of its potential returns per unit of risk. Frontier Group Holdings is currently generating about -0.07 per unit of risk. If you would invest  225.00  in El Al Israel on December 22, 2024 and sell it today you would earn a total of  75.00  from holding El Al Israel or generate 33.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	93.75%
Values	Daily Returns

El Al Israel  vs.  Frontier Group Holdings

El Al Israel

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in El Al Israel are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly conflicting essential indicators, El Al reported solid returns over the last few months and may actually be approaching a breakup point.

Frontier Group Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Frontier Group Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with El Al and Frontier Group

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

The idea behind El Al Israel and Frontier Group Holdings 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.