Correlation Between Frost Credit and Frost Growth
Can any of the company-specific risk be diversified away by investing in both Frost Credit 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 Credit 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 Credit Fund and Frost Growth Equity, you can compare the effects of market volatilities on Frost Credit 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 Credit with a short position of Frost Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Frost Credit and Frost Growth.
Diversification Opportunities for Frost Credit and Frost Growth
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Frost and Frost is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Frost Credit Fund 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 Credit 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 Credit Fund 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 Credit i.e., Frost Credit and Frost Growth go up and down completely randomly.
Pair Corralation between Frost Credit and Frost Growth
Assuming the 90 days horizon Frost Credit Fund is expected to generate 0.06 times more return on investment than Frost Growth. However, Frost Credit Fund is 17.76 times less risky than Frost Growth. It trades about 0.15 of its potential returns per unit of risk. Frost Growth Equity is currently generating about -0.18 per unit of risk. If you would invest 943.00 in Frost Credit Fund on August 29, 2024 and sell it today you would earn a total of 7.00 from holding Frost Credit Fund or generate 0.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Frost Credit Fund vs. Frost Growth Equity
Performance |
| Timeline |
| Frost Credit |
| Frost Growth Equity |
Frost Credit and Frost Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Frost Credit and Frost Growth
The main advantage of trading using opposite Frost Credit and Frost Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Frost Credit 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 Credit vs. Frost Growth Equity | Frost Credit vs. Frost Low Duration | Frost Credit vs. Frost Total Return | Frost Credit vs. Frost Total Return |
| Frost Growth vs. Frost Low Duration | Frost Growth vs. Frost Total Return | Frost Growth vs. Frost Credit Fund | Frost Growth vs. Fidelity Advisor Freedom |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
Other Complementary Tools
| Share Portfolio Track or share privately all of your investments from the convenience of any device | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges | |
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio |