Correlation Between Frontier Mfg and F/m Investments
Can any of the company-specific risk be diversified away by investing in both Frontier Mfg and F/m Investments 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 Mfg and F/m Investments into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Frontier Mfg E and Fm Investments Large, you can compare the effects of market volatilities on Frontier Mfg and F/m Investments 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 Mfg with a short position of F/m Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Frontier Mfg and F/m Investments.
Diversification Opportunities for Frontier Mfg and F/m Investments
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Frontier and F/m is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Frontier Mfg E and Fm Investments Large in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fm Investments Large and Frontier Mfg 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 Mfg E are associated (or correlated) with F/m Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fm Investments Large has no effect on the direction of Frontier Mfg i.e., Frontier Mfg and F/m Investments go up and down completely randomly.
Pair Corralation between Frontier Mfg and F/m Investments
Assuming the 90 days horizon Frontier Mfg E is expected to generate 0.42 times more return on investment than F/m Investments. However, Frontier Mfg E is 2.36 times less risky than F/m Investments. It trades about -0.11 of its potential returns per unit of risk. Fm Investments Large is currently generating about -0.21 per unit of risk. If you would invest 1,717 in Frontier Mfg E on August 27, 2025 and sell it today you would lose (20.00) from holding Frontier Mfg E or give up 1.16% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Frontier Mfg E vs. Fm Investments Large
Performance |
| Timeline |
| Frontier Mfg E |
| Fm Investments Large |
Frontier Mfg and F/m Investments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Frontier Mfg and F/m Investments
The main advantage of trading using opposite Frontier Mfg and F/m Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Frontier Mfg position performs unexpectedly, F/m Investments 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 F/m Investments will offset losses from the drop in F/m Investments' long position.| Frontier Mfg vs. Fulcrum Diversified Absolute | Frontier Mfg vs. American Century Diversified | Frontier Mfg vs. Putnam Diversified Income | Frontier Mfg vs. Aqr Diversified Arbitrage |
| F/m Investments vs. Columbia High Yield | F/m Investments vs. Muzinich High Yield | F/m Investments vs. Alpine High Yield | F/m Investments vs. Gmo High Yield |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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