Correlation Between Waters and Frontier Group

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

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

Diversification Opportunities for Waters and Frontier Group

0.57

Correlation Coefficient

Waters  Frontier Group

Very weak diversification

The 3 months correlation between Waters and Frontier is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Waters 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 Waters 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 Waters 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 Waters i.e., Waters and Frontier Group go up and down completely randomly.

Pair Corralation between Waters and Frontier Group

Considering the 90-day investment horizon Waters is expected to generate 0.4 times more return on investment than Frontier Group. However, Waters is 2.51 times less risky than Frontier Group. It trades about -0.01 of its potential returns per unit of risk. Frontier Group Holdings is currently generating about -0.07 per unit of risk. If you would invest  36,976  in Waters on December 21, 2024 and sell it today you would lose (654.00) from holding Waters or give up 1.77% of portfolio value over 90 days.

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

Waters  vs.  Frontier Group Holdings

Waters

Risk-Adjusted Performance

Very Weak

Over the last 90 days Waters has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Waters is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Frontier Group Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Frontier Group Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Waters and Frontier Group

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

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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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..