Correlation Between Navigator Holdings and Frontline

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

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

Diversification Opportunities for Navigator Holdings and Frontline

0.77

Correlation Coefficient

Navigator Holdings  Frontline

Poor diversification

The 3 months correlation between Navigator and Frontline is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Navigator Holdings and Frontline in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Frontline and Navigator Holdings 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 Navigator Holdings 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 Navigator Holdings i.e., Navigator Holdings and Frontline go up and down completely randomly.

Pair Corralation between Navigator Holdings and Frontline

Given the investment horizon of 90 days Navigator Holdings is expected to generate 0.49 times more return on investment than Frontline. However, Navigator Holdings is 2.05 times less risky than Frontline. It trades about -0.07 of its potential returns per unit of risk. Frontline is currently generating about -0.25 per unit of risk. If you would invest  1,608  in Navigator Holdings on September 19, 2024 and sell it today you would lose (121.00) from holding Navigator Holdings or give up 7.52% of portfolio value over 90 days.

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

Navigator Holdings  vs.  Frontline

Navigator Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Navigator Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's technical and fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

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 Navigator Holdings and Frontline

The main advantage of trading using opposite Navigator Holdings and Frontline positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Navigator Holdings 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 Navigator Holdings 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.

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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.