Correlation Between 2020 Bulkers and Frontline

Can any of the company-specific risk be diversified away by investing in both 2020 Bulkers and Frontline 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 2020 Bulkers and Frontline into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between 2020 Bulkers and Frontline, you can compare the effects of market volatilities on 2020 Bulkers and Frontline 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 2020 Bulkers with a short position of Frontline. Check out your portfolio center. Please also check ongoing floating volatility patterns of 2020 Bulkers and Frontline.

Diversification Opportunities for 2020 Bulkers and Frontline

0.67

Correlation Coefficient

2020 Bulkers  Frontline

Poor diversification

The 3 months correlation between 2020 and Frontline is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding 2020 Bulkers and Frontline in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Frontline and 2020 Bulkers 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 2020 Bulkers are associated (or correlated) with Frontline. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Frontline has no effect on the direction of 2020 Bulkers i.e., 2020 Bulkers and Frontline go up and down completely randomly.

Pair Corralation between 2020 Bulkers and Frontline

Assuming the 90 days trading horizon 2020 Bulkers is expected to generate 0.72 times more return on investment than Frontline. However, 2020 Bulkers is 1.38 times less risky than Frontline. It trades about 0.19 of its potential returns per unit of risk. Frontline is currently generating about 0.11 per unit of risk. If you would invest  10,373  in 2020 Bulkers on April 24, 2025 and sell it today you would earn a total of  2,517  from holding 2020 Bulkers or generate 24.26% return on investment over 90 days.

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

2020 Bulkers  vs.  Frontline

2020 Bulkers

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in 2020 Bulkers are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting essential indicators, 2020 Bulkers disclosed solid returns over the last few months and may actually be approaching a breakup point.

Frontline

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Frontline are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Frontline disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with 2020 Bulkers and Frontline

The main advantage of trading using opposite 2020 Bulkers and Frontline positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 2020 Bulkers position performs unexpectedly, Frontline 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 Frontline will offset losses from the drop in Frontline's long position.

The idea behind 2020 Bulkers and Frontline 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.