Correlation Between Frontera and CompX International
Can any of the company-specific risk be diversified away by investing in both Frontera and CompX International 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 and CompX International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Frontera Group and CompX International, you can compare the effects of market volatilities on Frontera and CompX International 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 with a short position of CompX International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Frontera and CompX International.
Diversification Opportunities for Frontera and CompX International
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Frontera and CompX is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Frontera Group and CompX International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CompX International and Frontera 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 Group are associated (or correlated) with CompX International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CompX International has no effect on the direction of Frontera i.e., Frontera and CompX International go up and down completely randomly.
Pair Corralation between Frontera and CompX International
Given the investment horizon of 90 days Frontera Group is expected to generate 3.69 times more return on investment than CompX International. However, Frontera is 3.69 times more volatile than CompX International. It trades about 0.03 of its potential returns per unit of risk. CompX International is currently generating about 0.05 per unit of risk. If you would invest 0.70 in Frontera Group on September 26, 2024 and sell it today you would lose (0.69) from holding Frontera Group or give up 98.57% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Flat |
Strength | Insignificant |
Accuracy | 99.8% |
Values | Daily Returns |
Frontera Group vs. CompX International
Performance |
Timeline |
Frontera Group |
CompX International |
Frontera and CompX International Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Frontera and CompX International
The main advantage of trading using opposite Frontera and CompX International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Frontera position performs unexpectedly, CompX International 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 CompX International will offset losses from the drop in CompX International's long position.Frontera vs. Watsco Inc | Frontera vs. Fastenal Company | Frontera vs. SiteOne Landscape Supply | Frontera vs. Ferguson Plc |
CompX International vs. International Consolidated Companies | CompX International vs. Frontera Group | CompX International vs. All American Pet | CompX International vs. XCPCNL Business Services |
Check out your portfolio center.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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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