Correlation Between Frontier Transport and Copper 360

Can any of the company-specific risk be diversified away by investing in both Frontier Transport and Copper 360 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 Frontier Transport and Copper 360 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Frontier Transport Holdings and Copper 360, you can compare the effects of market volatilities on Frontier Transport and Copper 360 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 Frontier Transport with a short position of Copper 360. Check out your portfolio center. Please also check ongoing floating volatility patterns of Frontier Transport and Copper 360.

Diversification Opportunities for Frontier Transport and Copper 360

0.7

Correlation Coefficient

Frontier Transport  Copper 360

Poor diversification

The 3 months correlation between Frontier and Copper is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Frontier Transport Holdings and Copper 360 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Copper 360 and Frontier Transport 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 Frontier Transport Holdings are associated (or correlated) with Copper 360. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Copper 360 has no effect on the direction of Frontier Transport i.e., Frontier Transport and Copper 360 go up and down completely randomly.

Pair Corralation between Frontier Transport and Copper 360

Assuming the 90 days trading horizon Frontier Transport Holdings is expected to generate 0.54 times more return on investment than Copper 360. However, Frontier Transport Holdings is 1.85 times less risky than Copper 360. It trades about -0.1 of its potential returns per unit of risk. Copper 360 is currently generating about -0.09 per unit of risk. If you would invest  76,900  in Frontier Transport Holdings on December 30, 2024 and sell it today you would lose (8,300) from holding Frontier Transport Holdings or give up 10.79% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.44%
Values	Daily Returns

Frontier Transport Holdings  vs.  Copper 360

Frontier Transport

Risk-Adjusted Performance

Very Weak

Over the last 90 days Frontier Transport Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Copper 360

Risk-Adjusted Performance

Very Weak

Over the last 90 days Copper 360 has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's technical and 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 Frontier Transport and Copper 360

The main advantage of trading using opposite Frontier Transport and Copper 360 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Frontier Transport position performs unexpectedly, Copper 360 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 Copper 360 will offset losses from the drop in Copper 360's long position.

The idea behind Frontier Transport Holdings and Copper 360 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..