Correlation Between Frost Total and Frost Growth
Can any of the company-specific risk be diversified away by investing in both Frost Total and Frost Growth 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 Total and Frost Growth into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Frost Total Return and Frost Growth Equity, you can compare the effects of market volatilities on Frost Total and Frost Growth 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 Total with a short position of Frost Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Frost Total and Frost Growth.
Diversification Opportunities for Frost Total and Frost Growth
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Frost and Frost is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Frost Total Return and Frost Growth Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Frost Growth Equity and Frost Total 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 Total Return are associated (or correlated) with Frost Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Frost Growth Equity has no effect on the direction of Frost Total i.e., Frost Total and Frost Growth go up and down completely randomly.
Pair Corralation between Frost Total and Frost Growth
Assuming the 90 days horizon Frost Total Return is expected to under-perform the Frost Growth. But the mutual fund apears to be less risky and, when comparing its historical volatility, Frost Total Return is 5.09 times less risky than Frost Growth. The mutual fund trades about -0.24 of its potential returns per unit of risk. The Frost Growth Equity is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 1,529 in Frost Growth Equity on September 24, 2024 and sell it today you would earn a total of 42.00 from holding Frost Growth Equity or generate 2.75% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Frost Total Return vs. Frost Growth Equity
Performance |
Timeline |
Frost Total Return |
Frost Growth Equity |
Frost Total and Frost Growth Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Frost Total and Frost Growth
The main advantage of trading using opposite Frost Total and Frost Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Frost Total position performs unexpectedly, Frost Growth 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 Growth will offset losses from the drop in Frost Growth's long position.Frost Total vs. Frost Growth Equity | Frost Total vs. Frost Total Return | Frost Total vs. Frost Low Duration | Frost Total vs. Frost Growth Equity |
Frost Growth vs. Frost Growth Equity | Frost Growth vs. Frost Low Duration | Frost Growth vs. Frost Total Return | Frost Growth vs. Frost Total Return |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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