Correlation Between Frontline and Wilh Wilhelmsen

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

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

Diversification Opportunities for Frontline and Wilh Wilhelmsen

0.86

Correlation Coefficient

Frontline  Wilh Wilhelmsen

Very poor diversification

The 3 months correlation between Frontline and Wilh is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Frontline and Wilh Wilhelmsen Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wilh Wilhelmsen Holding and Frontline 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 Frontline are associated (or correlated) with Wilh Wilhelmsen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wilh Wilhelmsen Holding has no effect on the direction of Frontline i.e., Frontline and Wilh Wilhelmsen go up and down completely randomly.

Pair Corralation between Frontline and Wilh Wilhelmsen

Assuming the 90 days trading horizon Frontline is expected to under-perform the Wilh Wilhelmsen. In addition to that, Frontline is 1.56 times more volatile than Wilh Wilhelmsen Holding. It trades about -0.26 of its total potential returns per unit of risk. Wilh Wilhelmsen Holding is currently generating about -0.09 per unit of volatility. If you would invest  43,207  in Wilh Wilhelmsen Holding on September 19, 2024 and sell it today you would lose (4,257) from holding Wilh Wilhelmsen Holding or give up 9.85% of portfolio value over 90 days.

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

Frontline  vs.  Wilh Wilhelmsen Holding

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. Despite conflicting performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Wilh Wilhelmsen Holding

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Wilh Wilhelmsen Holding has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's forward indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Frontline and Wilh Wilhelmsen

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

The idea behind Frontline and Wilh Wilhelmsen Holding 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.