Correlation Between Frontier Transport and Quantum Foods

Can any of the company-specific risk be diversified away by investing in both Frontier Transport and Quantum Foods 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 Quantum Foods 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 Quantum Foods Holdings, you can compare the effects of market volatilities on Frontier Transport and Quantum Foods 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 Quantum Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Frontier Transport and Quantum Foods.

Diversification Opportunities for Frontier Transport and Quantum Foods

0.7

Correlation Coefficient

Frontier Transport  Quantum Foods

Poor diversification

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

Pair Corralation between Frontier Transport and Quantum Foods

Assuming the 90 days trading horizon Frontier Transport Holdings is expected to under-perform the Quantum Foods. But the stock apears to be less risky and, when comparing its historical volatility, Frontier Transport Holdings is 3.3 times less risky than Quantum Foods. The stock trades about -0.08 of its potential returns per unit of risk. The Quantum Foods Holdings is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  90,600  in Quantum Foods Holdings on December 23, 2024 and sell it today you would lose (10,900) from holding Quantum Foods Holdings or give up 12.03% of portfolio value over 90 days.

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

Frontier Transport Holdings  vs.  Quantum Foods Holdings

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.

Quantum Foods Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Quantum Foods Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Quantum Foods is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Frontier Transport and Quantum Foods

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

The idea behind Frontier Transport Holdings and Quantum Foods 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.