Correlation Between Frontera Energy and Wajax

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

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

Diversification Opportunities for Frontera Energy and Wajax

0.56

Correlation Coefficient

Frontera Energy  Wajax

Very weak diversification

The 3 months correlation between Frontera and Wajax is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Frontera Energy Corp and Wajax in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wajax and Frontera Energy 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 Frontera Energy Corp are associated (or correlated) with Wajax. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wajax has no effect on the direction of Frontera Energy i.e., Frontera Energy and Wajax go up and down completely randomly.

Pair Corralation between Frontera Energy and Wajax

Assuming the 90 days trading horizon Frontera Energy Corp is expected to generate 1.58 times more return on investment than Wajax. However, Frontera Energy is 1.58 times more volatile than Wajax. It trades about 0.16 of its potential returns per unit of risk. Wajax is currently generating about 0.21 per unit of risk. If you would invest  468.00  in Frontera Energy Corp on May 3, 2025 and sell it today you would earn a total of  168.00  from holding Frontera Energy Corp or generate 35.9% return on investment over 90 days.

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

Frontera Energy Corp  vs.  Wajax

Frontera Energy Corp

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Frontera Energy Corp are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile fundamental indicators, Frontera Energy displayed solid returns over the last few months and may actually be approaching a breakup point.

Wajax

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Wajax are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Wajax displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Frontera Energy and Wajax

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

The idea behind Frontera Energy Corp and Wajax 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.