Correlation Between Kensington Active and Commonwealth Global
Can any of the company-specific risk be diversified away by investing in both Kensington Active and Commonwealth Global 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 Kensington Active and Commonwealth Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kensington Active Advantage and Commonwealth Global Fund, you can compare the effects of market volatilities on Kensington Active and Commonwealth Global 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 Kensington Active with a short position of Commonwealth Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kensington Active and Commonwealth Global.
Diversification Opportunities for Kensington Active and Commonwealth Global
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Kensington and Commonwealth is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Kensington Active Advantage and Commonwealth Global Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Commonwealth Global and Kensington Active 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 Kensington Active Advantage are associated (or correlated) with Commonwealth Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Commonwealth Global has no effect on the direction of Kensington Active i.e., Kensington Active and Commonwealth Global go up and down completely randomly.
Pair Corralation between Kensington Active and Commonwealth Global
Assuming the 90 days horizon Kensington Active is expected to generate 1.2 times less return on investment than Commonwealth Global. But when comparing it to its historical volatility, Kensington Active Advantage is 1.98 times less risky than Commonwealth Global. It trades about 0.21 of its potential returns per unit of risk. Commonwealth Global Fund is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 2,141 in Commonwealth Global Fund on September 13, 2024 and sell it today you would earn a total of 31.00 from holding Commonwealth Global Fund or generate 1.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Kensington Active Advantage vs. Commonwealth Global Fund
Performance |
| Timeline |
| Kensington Active |
| Commonwealth Global |
Kensington Active and Commonwealth Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kensington Active and Commonwealth Global
The main advantage of trading using opposite Kensington Active and Commonwealth Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kensington Active position performs unexpectedly, Commonwealth Global 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 Commonwealth Global will offset losses from the drop in Commonwealth Global's long position.| Kensington Active vs. Fidelity Sai Inflationfocused | Kensington Active vs. Aqr Managed Futures | Kensington Active vs. Loomis Sayles Inflation | Kensington Active vs. Arrow 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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