Correlation Between Frontier Markets and Global Strategist
Can any of the company-specific risk be diversified away by investing in both Frontier Markets and Global Strategist 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 Markets and Global Strategist into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Frontier Markets Portfolio and Global Strategist Portfolio, you can compare the effects of market volatilities on Frontier Markets and Global Strategist 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 Markets with a short position of Global Strategist. Check out your portfolio center. Please also check ongoing floating volatility patterns of Frontier Markets and Global Strategist.
Diversification Opportunities for Frontier Markets and Global Strategist
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Frontier and Global is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Frontier Markets Portfolio and Global Strategist Portfolio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Strategist and Frontier Markets 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 Markets Portfolio are associated (or correlated) with Global Strategist. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Strategist has no effect on the direction of Frontier Markets i.e., Frontier Markets and Global Strategist go up and down completely randomly.
Pair Corralation between Frontier Markets and Global Strategist
Assuming the 90 days horizon Frontier Markets Portfolio is expected to generate 1.33 times more return on investment than Global Strategist. However, Frontier Markets is 1.33 times more volatile than Global Strategist Portfolio. It trades about 0.24 of its potential returns per unit of risk. Global Strategist Portfolio is currently generating about 0.22 per unit of risk. If you would invest 1,639 in Frontier Markets Portfolio on June 5, 2025 and sell it today you would earn a total of 120.00 from holding Frontier Markets Portfolio or generate 7.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Frontier Markets Portfolio vs. Global Strategist Portfolio
Performance |
| Timeline |
| Frontier Markets Por |
| Global Strategist |
Frontier Markets and Global Strategist Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Frontier Markets and Global Strategist
The main advantage of trading using opposite Frontier Markets and Global Strategist positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Frontier Markets position performs unexpectedly, Global Strategist 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 Global Strategist will offset losses from the drop in Global Strategist's long position.| Frontier Markets vs. Frontier Markets Portfolio | Frontier Markets vs. Hennessy Japan Fund | Frontier Markets vs. Hennessy Japan Fund | Frontier Markets vs. Hennessy Japan Small |
| Global Strategist vs. Jpmorgan Diversified Fund | Global Strategist vs. Tax Free Conservative Income | Global Strategist vs. Wilmington Diversified Income | Global Strategist vs. Victory Diversified Stock |
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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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