Correlation Between Forum Real and Kensington Active
Can any of the company-specific risk be diversified away by investing in both Forum Real and Kensington Active 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 Forum Real and Kensington Active into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Forum Real Estate and Kensington Active Advantage, you can compare the effects of market volatilities on Forum Real and Kensington Active 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 Forum Real with a short position of Kensington Active. Check out your portfolio center. Please also check ongoing floating volatility patterns of Forum Real and Kensington Active.
Diversification Opportunities for Forum Real and Kensington Active
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Forum and Kensington is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Forum Real Estate and Kensington Active Advantage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kensington Active and Forum Real 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 Forum Real Estate are associated (or correlated) with Kensington Active. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kensington Active has no effect on the direction of Forum Real i.e., Forum Real and Kensington Active go up and down completely randomly.
Pair Corralation between Forum Real and Kensington Active
Assuming the 90 days horizon Forum Real is expected to generate 15.63 times less return on investment than Kensington Active. But when comparing it to its historical volatility, Forum Real Estate is 2.29 times less risky than Kensington Active. It trades about 0.06 of its potential returns per unit of risk. Kensington Active Advantage is currently generating about 0.39 of returns per unit of risk over similar time horizon. If you would invest 995.00 in Kensington Active Advantage on September 4, 2024 and sell it today you would earn a total of 33.00 from holding Kensington Active Advantage or generate 3.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Forum Real Estate vs. Kensington Active Advantage
Performance |
| Timeline |
| Forum Real Estate |
| Kensington Active |
Forum Real and Kensington Active Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Forum Real and Kensington Active
The main advantage of trading using opposite Forum Real and Kensington Active positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Forum Real position performs unexpectedly, Kensington Active 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 Kensington Active will offset losses from the drop in Kensington Active's long position.| Forum Real vs. Barings Global Floating | Forum Real vs. Qs Global Equity | Forum Real vs. Dreyfusstandish Global Fixed | Forum Real vs. Ab Global Real |
| Kensington Active vs. Kensington Defender Institutional | Kensington Active vs. Kensington Active Advantage | Kensington Active vs. Kensington Dynamic Growth | Kensington Active vs. Kensington Dynamic Growth |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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