Correlation Between FrontView REIT, and KAT Exploration

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

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

Diversification Opportunities for FrontView REIT, and KAT Exploration

-0.2

Correlation Coefficient

FrontView REIT,  KAT Exploration

Good diversification

The 3 months correlation between FrontView and KAT is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding FrontView REIT, and KAT Exploration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KAT Exploration and FrontView REIT, 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 FrontView REIT, are associated (or correlated) with KAT Exploration. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KAT Exploration has no effect on the direction of FrontView REIT, i.e., FrontView REIT, and KAT Exploration go up and down completely randomly.

Pair Corralation between FrontView REIT, and KAT Exploration

Considering the 90-day investment horizon FrontView REIT, is expected to under-perform the KAT Exploration. But the stock apears to be less risky and, when comparing its historical volatility, FrontView REIT, is 11.79 times less risky than KAT Exploration. The stock trades about -0.09 of its potential returns per unit of risk. The KAT Exploration is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  0.05  in KAT Exploration on October 20, 2024 and sell it today you would lose (0.01) from holding KAT Exploration or give up 20.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

FrontView REIT,  vs.  KAT Exploration

FrontView REIT,

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days FrontView REIT, has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest uncertain performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

KAT Exploration

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in KAT Exploration are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, KAT Exploration showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with FrontView REIT, and KAT Exploration

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

The idea behind FrontView REIT, and KAT Exploration 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.