Correlation Between Frost Total and Edgewood Growth

Can any of the company-specific risk be diversified away by investing in both Frost Total and Edgewood 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 Edgewood 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 Edgewood Growth Fund, you can compare the effects of market volatilities on Frost Total and Edgewood 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 Edgewood Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Frost Total and Edgewood Growth.

Diversification Opportunities for Frost Total and Edgewood Growth

0.15

Correlation Coefficient

Frost Total  Edgewood Growth

Average diversification

The 3 months correlation between Frost and Edgewood is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Frost Total Return and Edgewood Growth Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Edgewood Growth 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 Edgewood Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Edgewood Growth has no effect on the direction of Frost Total i.e., Frost Total and Edgewood Growth go up and down completely randomly.

Pair Corralation between Frost Total and Edgewood Growth

Assuming the 90 days horizon Frost Total Return is expected to generate 0.28 times more return on investment than Edgewood Growth. However, Frost Total Return is 3.64 times less risky than Edgewood Growth. It trades about 0.24 of its potential returns per unit of risk. Edgewood Growth Fund is currently generating about -0.08 per unit of risk. If you would invest  959.00  in Frost Total Return on December 5, 2024 and sell it today you would earn a total of  25.00  from holding Frost Total Return or generate 2.61% return on investment over 90 days.

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

Frost Total Return  vs.  Edgewood Growth Fund

Frost Total Return

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Frost Total Return are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Frost Total is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Edgewood Growth

Risk-Adjusted Performance

Very Weak

Over the last 90 days Edgewood Growth Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's technical and fundamental indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with Frost Total and Edgewood Growth

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

The idea behind Frost Total Return and Edgewood Growth Fund 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.