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

0.97

Correlation Coefficient

Frontier Markets  Global Strategist

Almost no diversification

The 3 months correlation between Frontier and Global is 0.97. 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 1.49 times more return on investment than Global Strategist. However, Frontier Markets is 1.49 times more volatile than Global Strategist Portfolio. It trades about 0.39 of its potential returns per unit of risk. Global Strategist Portfolio is currently generating about 0.26 per unit of risk. If you would invest  1,524  in Frontier Markets Portfolio on May 4, 2025 and sell it today you would earn a total of  207.00  from holding Frontier Markets Portfolio or generate 13.58% 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

Frontier Markets Por

Risk-Adjusted Performance

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Frontier Markets Portfolio are ranked lower than 31 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Frontier Markets showed solid returns over the last few months and may actually be approaching a breakup point.

Global Strategist

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Global Strategist Portfolio are ranked lower than 20 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Global Strategist is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

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.

The idea behind Frontier Markets Portfolio and Global Strategist Portfolio 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..