Correlation Between Kensington Dynamic and Siit Large
Can any of the company-specific risk be diversified away by investing in both Kensington Dynamic and Siit Large 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 Dynamic and Siit Large into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kensington Dynamic Growth and Siit Large Cap, you can compare the effects of market volatilities on Kensington Dynamic and Siit Large 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 Dynamic with a short position of Siit Large. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kensington Dynamic and Siit Large.
Diversification Opportunities for Kensington Dynamic and Siit Large
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Kensington and SIIT is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Kensington Dynamic Growth and Siit Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Siit Large Cap and Kensington Dynamic 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 Dynamic Growth are associated (or correlated) with Siit Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Siit Large Cap has no effect on the direction of Kensington Dynamic i.e., Kensington Dynamic and Siit Large go up and down completely randomly.
Pair Corralation between Kensington Dynamic and Siit Large
Assuming the 90 days horizon Kensington Dynamic is expected to generate 1.02 times less return on investment than Siit Large. In addition to that, Kensington Dynamic is 1.16 times more volatile than Siit Large Cap. It trades about 0.34 of its total potential returns per unit of risk. Siit Large Cap is currently generating about 0.4 per unit of volatility. If you would invest 1,234 in Siit Large Cap on September 4, 2024 and sell it today you would earn a total of 72.00 from holding Siit Large Cap or generate 5.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Kensington Dynamic Growth vs. Siit Large Cap
Performance |
| Timeline |
| Kensington Dynamic Growth |
| Siit Large Cap |
Kensington Dynamic and Siit Large Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kensington Dynamic and Siit Large
The main advantage of trading using opposite Kensington Dynamic and Siit Large positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kensington Dynamic position performs unexpectedly, Siit Large 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 Siit Large will offset losses from the drop in Siit Large's long position.The idea behind Kensington Dynamic Growth and Siit Large Cap 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.
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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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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