Correlation Between Global Partners and Frontline

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

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

Diversification Opportunities for Global Partners and Frontline

-0.78

Correlation Coefficient

Global Partners  Frontline

Pay attention - limited upside

The 3 months correlation between Global and Frontline is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Global Partners LP and Frontline in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Frontline and Global Partners 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 Global Partners LP are associated (or correlated) with Frontline. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Frontline has no effect on the direction of Global Partners i.e., Global Partners and Frontline go up and down completely randomly.

Pair Corralation between Global Partners and Frontline

Considering the 90-day investment horizon Global Partners LP is expected to generate 0.79 times more return on investment than Frontline. However, Global Partners LP is 1.27 times less risky than Frontline. It trades about 0.05 of its potential returns per unit of risk. Frontline is currently generating about 0.04 per unit of risk. If you would invest  2,875  in Global Partners LP on September 20, 2024 and sell it today you would earn a total of  1,778  from holding Global Partners LP or generate 61.84% return on investment over 90 days.

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

Global Partners LP  vs.  Frontline

Global Partners LP

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Global Partners LP are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak essential indicators, Global Partners may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Frontline

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Frontline has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Global Partners and Frontline

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

The idea behind Global Partners LP and Frontline 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..