Correlation Between Quadratic Interest and KFA Mount
Can any of the company-specific risk be diversified away by investing in both Quadratic Interest and KFA Mount 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 Quadratic Interest and KFA Mount into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Quadratic Interest Rate and KFA Mount Lucas, you can compare the effects of market volatilities on Quadratic Interest and KFA Mount 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 Quadratic Interest with a short position of KFA Mount. Check out your portfolio center. Please also check ongoing floating volatility patterns of Quadratic Interest and KFA Mount.
Diversification Opportunities for Quadratic Interest and KFA Mount
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Quadratic and KFA is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Quadratic Interest Rate and KFA Mount Lucas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KFA Mount Lucas and Quadratic Interest 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 Quadratic Interest Rate are associated (or correlated) with KFA Mount. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KFA Mount Lucas has no effect on the direction of Quadratic Interest i.e., Quadratic Interest and KFA Mount go up and down completely randomly.
Pair Corralation between Quadratic Interest and KFA Mount
Given the investment horizon of 90 days Quadratic Interest Rate is expected to under-perform the KFA Mount. But the etf apears to be less risky and, when comparing its historical volatility, Quadratic Interest Rate is 1.13 times less risky than KFA Mount. The etf trades about -0.06 of its potential returns per unit of risk. The KFA Mount Lucas is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest 2,978 in KFA Mount Lucas on September 4, 2024 and sell it today you would lose (208.00) from holding KFA Mount Lucas or give up 6.98% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Quadratic Interest Rate vs. KFA Mount Lucas
Performance |
| Timeline |
| Quadratic Interest Rate |
| KFA Mount Lucas |
Quadratic Interest and KFA Mount Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Quadratic Interest and KFA Mount
The main advantage of trading using opposite Quadratic Interest and KFA Mount positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Quadratic Interest position performs unexpectedly, KFA Mount 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 KFA Mount will offset losses from the drop in KFA Mount's long position.| Quadratic Interest vs. Horizon Kinetics Inflation | Quadratic Interest vs. Simplify Interest Rate | Quadratic Interest vs. Quadratic Deflation ETF | Quadratic Interest vs. Cambria Tail Risk |
| KFA Mount vs. First Trust Managed | KFA Mount vs. Simplify Exchange Traded | KFA Mount vs. WisdomTree Managed Futures |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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