Correlation Between SPACE and Frost Low
Can any of the company-specific risk be diversified away by investing in both SPACE 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 SPACE and Frost Low into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SPACE and Frost Low Duration, you can compare the effects of market volatilities on SPACE 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 SPACE with a short position of Frost Low. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPACE and Frost Low.
Diversification Opportunities for SPACE and Frost Low
Very good diversification
The 3 months correlation between SPACE and Frost is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding SPACE 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 SPACE 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 SPACE 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 SPACE i.e., SPACE and Frost Low go up and down completely randomly.
Pair Corralation between SPACE and Frost Low
Assuming the 90 days horizon SPACE is expected to generate 36.87 times more return on investment than Frost Low. However, SPACE is 36.87 times more volatile than Frost Low Duration. It trades about 0.52 of its potential returns per unit of risk. Frost Low Duration is currently generating about 0.04 per unit of risk. If you would invest 36.00 in SPACE on September 3, 2024 and sell it today you would earn a total of 23.00 from holding SPACE or generate 63.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
SPACE vs. Frost Low Duration
Performance |
| Timeline |
| SPACE |
| Frost Low Duration |
SPACE and Frost Low Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPACE and Frost Low
The main advantage of trading using opposite SPACE and Frost Low positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPACE 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.The idea behind SPACE and Frost Low Duration 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.| Frost Low vs. SPACE | Frost Low vs. Bayview Acquisition Corp | Frost Low vs. Ampleforth | Frost Low vs. ionet |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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