Correlation Between Lifevantage and Frontier Group

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

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

Diversification Opportunities for Lifevantage and Frontier Group

0.75

Correlation Coefficient

Lifevantage  Frontier Group

Poor diversification

The 3 months correlation between Lifevantage and Frontier is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Lifevantage and Frontier Group Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Frontier Group Holdings and Lifevantage 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 Lifevantage are associated (or correlated) with Frontier Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Frontier Group Holdings has no effect on the direction of Lifevantage i.e., Lifevantage and Frontier Group go up and down completely randomly.

Pair Corralation between Lifevantage and Frontier Group

Given the investment horizon of 90 days Lifevantage is expected to generate 1.07 times more return on investment than Frontier Group. However, Lifevantage is 1.07 times more volatile than Frontier Group Holdings. It trades about 0.24 of its potential returns per unit of risk. Frontier Group Holdings is currently generating about 0.09 per unit of risk. If you would invest  1,294  in Lifevantage on October 24, 2024 and sell it today you would earn a total of  1,237  from holding Lifevantage or generate 95.6% return on investment over 90 days.

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

Lifevantage  vs.  Frontier Group Holdings

Lifevantage

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Lifevantage are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Lifevantage displayed solid returns over the last few months and may actually be approaching a breakup point.

Frontier Group Holdings

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Frontier Group Holdings are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain fundamental indicators, Frontier Group exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Lifevantage and Frontier Group

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

The idea behind Lifevantage and Frontier Group 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.

Check out your portfolio center.

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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.