Correlation Between Frost Growth and Frost Kempner
Can any of the company-specific risk be diversified away by investing in both Frost Growth and Frost Kempner 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 Frost Growth and Frost Kempner into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Frost Growth Equity and Frost Kempner Multi Cap, you can compare the effects of market volatilities on Frost Growth and Frost Kempner 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 Frost Growth with a short position of Frost Kempner. Check out your portfolio center. Please also check ongoing floating volatility patterns of Frost Growth and Frost Kempner.
Diversification Opportunities for Frost Growth and Frost Kempner
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Frost and Frost is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Frost Growth Equity and Frost Kempner Multi Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Frost Kempner Multi and Frost Growth 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 Frost Growth Equity are associated (or correlated) with Frost Kempner. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Frost Kempner Multi has no effect on the direction of Frost Growth i.e., Frost Growth and Frost Kempner go up and down completely randomly.
Pair Corralation between Frost Growth and Frost Kempner
Assuming the 90 days horizon Frost Growth Equity is expected to under-perform the Frost Kempner. In addition to that, Frost Growth is 8.26 times more volatile than Frost Kempner Multi Cap. It trades about -0.16 of its total potential returns per unit of risk. Frost Kempner Multi Cap is currently generating about 0.05 per unit of volatility. If you would invest 1,252 in Frost Kempner Multi Cap on September 17, 2024 and sell it today you would earn a total of 6.00 from holding Frost Kempner Multi Cap or generate 0.48% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Frost Growth Equity vs. Frost Kempner Multi Cap
Performance |
Timeline |
Frost Growth Equity |
Frost Kempner Multi |
Frost Growth and Frost Kempner Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Frost Growth and Frost Kempner
The main advantage of trading using opposite Frost Growth and Frost Kempner positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Frost Growth position performs unexpectedly, Frost Kempner 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 Frost Kempner will offset losses from the drop in Frost Kempner's long position.Frost Growth vs. Frost Kempner Multi Cap | Frost Growth vs. Frost Low Duration | Frost Growth vs. Frost Total Return | Frost Growth vs. Frost Growth Equity |
Frost Kempner vs. Frost Growth Equity | Frost Kempner vs. Frost Low Duration | Frost Kempner vs. Frost Total Return | Frost Kempner vs. Frost Kempner Multi Cap |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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