Correlation Between Frontline and Alexander Baldwin

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

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

Diversification Opportunities for Frontline and Alexander Baldwin

-0.22

Correlation Coefficient

Frontline  Alexander Baldwin

Very good diversification

The 3 months correlation between Frontline and Alexander is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Frontline and Alexander Baldwin Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alexander Baldwin and Frontline 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 Frontline are associated (or correlated) with Alexander Baldwin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alexander Baldwin has no effect on the direction of Frontline i.e., Frontline and Alexander Baldwin go up and down completely randomly.

Pair Corralation between Frontline and Alexander Baldwin

Considering the 90-day investment horizon Frontline is expected to under-perform the Alexander Baldwin. In addition to that, Frontline is 2.63 times more volatile than Alexander Baldwin Holdings. It trades about -0.24 of its total potential returns per unit of risk. Alexander Baldwin Holdings is currently generating about -0.15 per unit of volatility. If you would invest  1,958  in Alexander Baldwin Holdings on September 21, 2024 and sell it today you would lose (211.00) from holding Alexander Baldwin Holdings or give up 10.78% of portfolio value over 90 days.

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

Frontline  vs.  Alexander Baldwin Holdings

Frontline

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Frontline has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Alexander Baldwin

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Alexander Baldwin Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Frontline and Alexander Baldwin

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

The idea behind Frontline and Alexander Baldwin 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.