Correlation Between Frontier Transport and Rex Trueform

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

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

Diversification Opportunities for Frontier Transport and Rex Trueform

-0.17

Correlation Coefficient

Frontier Transport  Rex Trueform

Good diversification

The 3 months correlation between Frontier and Rex is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Frontier Transport Holdings and Rex Trueform Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rex Trueform Group and Frontier Transport 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 Frontier Transport Holdings are associated (or correlated) with Rex Trueform. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rex Trueform Group has no effect on the direction of Frontier Transport i.e., Frontier Transport and Rex Trueform go up and down completely randomly.

Pair Corralation between Frontier Transport and Rex Trueform

Assuming the 90 days trading horizon Frontier Transport Holdings is expected to generate 4.5 times more return on investment than Rex Trueform. However, Frontier Transport is 4.5 times more volatile than Rex Trueform Group. It trades about 0.04 of its potential returns per unit of risk. Rex Trueform Group is currently generating about -0.1 per unit of risk. If you would invest  73,444  in Frontier Transport Holdings on September 13, 2024 and sell it today you would earn a total of  3,556  from holding Frontier Transport Holdings or generate 4.84% return on investment over 90 days.

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

Frontier Transport Holdings  vs.  Rex Trueform Group

Frontier Transport

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Frontier Transport Holdings are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak technical and fundamental indicators, Frontier Transport may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Rex Trueform Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Rex Trueform Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Rex Trueform is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Frontier Transport and Rex Trueform

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

The idea behind Frontier Transport Holdings and Rex Trueform Group 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..