Correlation Between Uber Technologies and Frontier Group

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

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

Diversification Opportunities for Uber Technologies and Frontier Group

-0.26

Correlation Coefficient

Uber Technologies  Frontier Group

Very good diversification

The 3 months correlation between Uber and Frontier is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Uber Technologies 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 Uber Technologies 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 Uber Technologies 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 Uber Technologies i.e., Uber Technologies and Frontier Group go up and down completely randomly.

Pair Corralation between Uber Technologies and Frontier Group

Given the investment horizon of 90 days Uber Technologies is expected to generate 0.55 times more return on investment than Frontier Group. However, Uber Technologies is 1.83 times less risky than Frontier Group. It trades about 0.07 of its potential returns per unit of risk. Frontier Group Holdings is currently generating about 0.01 per unit of risk. If you would invest  3,420  in Uber Technologies on October 10, 2024 and sell it today you would earn a total of  3,195  from holding Uber Technologies or generate 93.42% return on investment over 90 days.

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

Uber Technologies  vs.  Frontier Group Holdings

Uber Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Uber Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unfluctuating performance in the last few months, the Stock's technical and fundamental indicators remain relatively invariable which may send shares a bit higher in February 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Frontier Group Holdings

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Frontier Group Holdings are ranked lower than 10 (%) 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 Uber Technologies and Frontier Group

The main advantage of trading using opposite Uber Technologies and Frontier Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Uber Technologies 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 Uber Technologies 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.