Correlation Between Easterly Snow and Frost Credit

Can any of the company-specific risk be diversified away by investing in both Easterly Snow and Frost Credit 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 Easterly Snow and Frost Credit into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Easterly Snow Longshort and Frost Credit Fund, you can compare the effects of market volatilities on Easterly Snow and Frost Credit 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 Easterly Snow with a short position of Frost Credit. Check out your portfolio center. Please also check ongoing floating volatility patterns of Easterly Snow and Frost Credit.

Diversification Opportunities for Easterly Snow and Frost Credit

-0.11

Correlation Coefficient

Easterly Snow  Frost Credit

Good diversification

The 3 months correlation between Easterly and Frost is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Easterly Snow Longshort and Frost Credit Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Frost Credit and Easterly Snow 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 Easterly Snow Longshort are associated (or correlated) with Frost Credit. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Frost Credit has no effect on the direction of Easterly Snow i.e., Easterly Snow and Frost Credit go up and down completely randomly.

Pair Corralation between Easterly Snow and Frost Credit

Assuming the 90 days horizon Easterly Snow Longshort is expected to under-perform the Frost Credit. In addition to that, Easterly Snow is 5.36 times more volatile than Frost Credit Fund. It trades about -0.29 of its total potential returns per unit of risk. Frost Credit Fund is currently generating about 0.19 per unit of volatility. If you would invest  941.00  in Frost Credit Fund on September 18, 2024 and sell it today you would earn a total of  8.00  from holding Frost Credit Fund or generate 0.85% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

Easterly Snow Longshort  vs.  Frost Credit Fund

Easterly Snow Longshort

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Easterly Snow Longshort has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Easterly Snow is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Frost Credit

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Frost Credit Fund are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Frost Credit is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Easterly Snow and Frost Credit

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

The idea behind Easterly Snow Longshort and Frost Credit 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..