Correlation Between Frontera Energy and Journey Energy

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

By analyzing existing cross correlation between Frontera Energy Corp and Journey Energy, you can compare the effects of market volatilities on Frontera Energy and Journey Energy 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 Frontera Energy with a short position of Journey Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Frontera Energy and Journey Energy.

Diversification Opportunities for Frontera Energy and Journey Energy

0.93

Correlation Coefficient

Frontera Energy  Journey Energy

Almost no diversification

The 3 months correlation between Frontera and Journey is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Frontera Energy Corp and Journey Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Journey Energy and Frontera Energy 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 Frontera Energy Corp are associated (or correlated) with Journey Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Journey Energy has no effect on the direction of Frontera Energy i.e., Frontera Energy and Journey Energy go up and down completely randomly.

Pair Corralation between Frontera Energy and Journey Energy

Assuming the 90 days horizon Frontera Energy Corp is expected to under-perform the Journey Energy. But the pink sheet apears to be less risky and, when comparing its historical volatility, Frontera Energy Corp is 1.23 times less risky than Journey Energy. The pink sheet trades about -0.11 of its potential returns per unit of risk. The Journey Energy is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  132.00  in Journey Energy on December 30, 2024 and sell it today you would lose (9.00) from holding Journey Energy or give up 6.82% of portfolio value over 90 days.

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

Frontera Energy Corp  vs.  Journey Energy

Frontera Energy Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Frontera Energy Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's fundamental indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Journey Energy

Risk-Adjusted Performance

Very Weak

Over the last 90 days Journey Energy has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Journey Energy is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Frontera Energy and Journey Energy

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

The idea behind Frontera Energy Corp and Journey Energy 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.