Correlation Between Champlain Small and Kinetics Small
Can any of the company-specific risk be diversified away by investing in both Champlain Small and Kinetics Small 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 Champlain Small and Kinetics Small into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Champlain Small and Kinetics Small Cap, you can compare the effects of market volatilities on Champlain Small and Kinetics Small 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 Champlain Small with a short position of Kinetics Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Champlain Small and Kinetics Small.
Diversification Opportunities for Champlain Small and Kinetics Small
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Champlain and Kinetics is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Champlain Small and Kinetics Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kinetics Small Cap and Champlain Small 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 Champlain Small are associated (or correlated) with Kinetics Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kinetics Small Cap has no effect on the direction of Champlain Small i.e., Champlain Small and Kinetics Small go up and down completely randomly.
Pair Corralation between Champlain Small and Kinetics Small
Assuming the 90 days horizon Champlain Small is expected to generate 6.5 times less return on investment than Kinetics Small. But when comparing it to its historical volatility, Champlain Small is 1.4 times less risky than Kinetics Small. It trades about 0.02 of its potential returns per unit of risk. Kinetics Small Cap is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 15,759 in Kinetics Small Cap on November 1, 2024 and sell it today you would earn a total of 3,263 from holding Kinetics Small Cap or generate 20.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Champlain Small vs. Kinetics Small Cap
Performance |
| Timeline |
| Champlain Small |
| Kinetics Small Cap |
Champlain Small and Kinetics Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Champlain Small and Kinetics Small
The main advantage of trading using opposite Champlain Small and Kinetics Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Champlain Small position performs unexpectedly, Kinetics Small 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 Kinetics Small will offset losses from the drop in Kinetics Small's long position.| Champlain Small vs. The Hartford Midcap | Champlain Small vs. Mfs Emerging Markets | Champlain Small vs. Wells Fargo Special | Champlain Small vs. Washington Mutual Investors |
| Kinetics Small vs. Alpine Ultra Short | Kinetics Small vs. Angel Oak Ultrashort | Kinetics Small vs. Touchstone Ultra Short | Kinetics Small vs. Blackrock Global Longshort |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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