Correlation Between Frontier Mfg and First Foundation

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

By analyzing existing cross correlation between Frontier Mfg Global and First Foundation Total, you can compare the effects of market volatilities on Frontier Mfg and First Foundation 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 First Foundation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Frontier Mfg and First Foundation.

Diversification Opportunities for Frontier Mfg and First Foundation

0.96

Correlation Coefficient

Frontier Mfg  First Foundation

Almost no diversification

The 3 months correlation between Frontier and First is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Frontier Mfg Global and First Foundation Total in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Foundation Total 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 Global are associated (or correlated) with First Foundation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Foundation Total has no effect on the direction of Frontier Mfg i.e., Frontier Mfg and First Foundation go up and down completely randomly.

Pair Corralation between Frontier Mfg and First Foundation

Assuming the 90 days horizon Frontier Mfg Global is expected to generate 1.09 times more return on investment than First Foundation. However, Frontier Mfg is 1.09 times more volatile than First Foundation Total. It trades about 0.33 of its potential returns per unit of risk. First Foundation Total is currently generating about 0.31 per unit of risk. If you would invest  1,496  in Frontier Mfg Global on April 24, 2025 and sell it today you would earn a total of  185.00  from holding Frontier Mfg Global or generate 12.37% return on investment over 90 days.

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

Frontier Mfg Global  vs.  First Foundation Total

Frontier Mfg Global

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Frontier Mfg Global are ranked lower than 25 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Frontier Mfg may actually be approaching a critical reversion point that can send shares even higher in August 2025.

First Foundation Total

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in First Foundation Total are ranked lower than 24 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, First Foundation may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Frontier Mfg and First Foundation

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

The idea behind Frontier Mfg Global and First Foundation Total 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.