Correlation Between Frontier Communications and Gogo

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

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

Diversification Opportunities for Frontier Communications and Gogo

-0.01

Correlation Coefficient

Frontier Communications  Gogo

Good diversification

The 3 months correlation between Frontier and Gogo is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Frontier Communications Parent and Gogo Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gogo Inc and Frontier Communications 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 Communications Parent are associated (or correlated) with Gogo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gogo Inc has no effect on the direction of Frontier Communications i.e., Frontier Communications and Gogo go up and down completely randomly.

Pair Corralation between Frontier Communications and Gogo

Given the investment horizon of 90 days Frontier Communications is expected to generate 5.55 times less return on investment than Gogo. But when comparing it to its historical volatility, Frontier Communications Parent is 16.67 times less risky than Gogo. It trades about 0.22 of its potential returns per unit of risk. Gogo Inc is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  759.00  in Gogo Inc on December 28, 2024 and sell it today you would earn a total of  111.00  from holding Gogo Inc or generate 14.62% return on investment over 90 days.

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

Frontier Communications Parent  vs.  Gogo Inc

Frontier Communications

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Frontier Communications Parent are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable fundamental drivers, Frontier Communications is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Gogo Inc

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Gogo Inc are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very weak technical and fundamental indicators, Gogo displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Frontier Communications and Gogo

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

The idea behind Frontier Communications Parent and Gogo Inc 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..