Correlation Between Independence Realty and Frontier Energy

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

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

Diversification Opportunities for Independence Realty and Frontier Energy

0.0

Correlation Coefficient

Independence Realty  Frontier Energy

Pay attention - limited upside

The 3 months correlation between Independence and Frontier is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Independence Realty Trust and Frontier Energy Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Frontier Energy Corp and Independence Realty 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 Independence Realty Trust are associated (or correlated) with Frontier Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Frontier Energy Corp has no effect on the direction of Independence Realty i.e., Independence Realty and Frontier Energy go up and down completely randomly.

Pair Corralation between Independence Realty and Frontier Energy

If you would invest  1,994  in Independence Realty Trust on September 4, 2024 and sell it today you would earn a total of  154.00  from holding Independence Realty Trust or generate 7.72% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	1.59%
Values	Daily Returns

Independence Realty Trust  vs.  Frontier Energy Corp

Independence Realty Trust

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Independence Realty Trust are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Independence Realty may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Frontier Energy Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Frontier Energy Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong technical and fundamental indicators, Frontier Energy is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Independence Realty and Frontier Energy

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

The idea behind Independence Realty Trust and Frontier Energy Corp 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.