Correlation Between Frost Credit and Frost Low
Can any of the company-specific risk be diversified away by investing in both Frost Credit and Frost Low 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 Low 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 Low Duration, you can compare the effects of market volatilities on Frost Credit and Frost Low 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 Low. Check out your portfolio center. Please also check ongoing floating volatility patterns of Frost Credit and Frost Low.
Diversification Opportunities for Frost Credit and Frost Low
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Frost and Frost is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Frost Credit Fund and Frost Low Duration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Frost Low Duration 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 Low. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Frost Low Duration has no effect on the direction of Frost Credit i.e., Frost Credit and Frost Low go up and down completely randomly.
Pair Corralation between Frost Credit and Frost Low
Assuming the 90 days horizon Frost Credit Fund is expected to generate 1.7 times more return on investment than Frost Low. However, Frost Credit is 1.7 times more volatile than Frost Low Duration. It trades about 0.15 of its potential returns per unit of risk. Frost Low Duration is currently generating about 0.03 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 | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Frost Credit Fund vs. Frost Low Duration
Performance |
| Timeline |
| Frost Credit |
| Frost Low Duration |
Frost Credit and Frost Low Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Frost Credit and Frost Low
The main advantage of trading using opposite Frost Credit and Frost Low positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Frost Credit position performs unexpectedly, Frost Low 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 Low will offset losses from the drop in Frost Low'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 Low vs. Frost Growth Equity | Frost Low vs. Frost Total Return | Frost Low vs. Frost Credit Fund | Frost Low 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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