Correlation Between K2 Asset and Diversified United
Can any of the company-specific risk be diversified away by investing in both K2 Asset and Diversified United 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 K2 Asset and Diversified United into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between K2 Asset Management and Diversified United Investment, you can compare the effects of market volatilities on K2 Asset and Diversified United 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 K2 Asset with a short position of Diversified United. Check out your portfolio center. Please also check ongoing floating volatility patterns of K2 Asset and Diversified United.
Diversification Opportunities for K2 Asset and Diversified United
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between KAM and Diversified is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding K2 Asset Management and Diversified United Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Diversified United and K2 Asset 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 K2 Asset Management are associated (or correlated) with Diversified United. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Diversified United has no effect on the direction of K2 Asset i.e., K2 Asset and Diversified United go up and down completely randomly.
Pair Corralation between K2 Asset and Diversified United
Assuming the 90 days trading horizon K2 Asset Management is expected to generate 2.64 times more return on investment than Diversified United. However, K2 Asset is 2.64 times more volatile than Diversified United Investment. It trades about 0.19 of its potential returns per unit of risk. Diversified United Investment is currently generating about -0.08 per unit of risk. If you would invest 7.00 in K2 Asset Management on October 1, 2024 and sell it today you would earn a total of 0.50 from holding K2 Asset Management or generate 7.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
K2 Asset Management vs. Diversified United Investment
Performance |
| Timeline |
| K2 Asset Management |
| Diversified United |
K2 Asset and Diversified United Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with K2 Asset and Diversified United
The main advantage of trading using opposite K2 Asset and Diversified United positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if K2 Asset position performs unexpectedly, Diversified United 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 Diversified United will offset losses from the drop in Diversified United's long position.| K2 Asset vs. Macquarie Technology Group | K2 Asset vs. Thorney Technologies | K2 Asset vs. Advanced Braking Technology | K2 Asset vs. EMvision Medical Devices |
| Diversified United vs. Hudson Investment Group | Diversified United vs. Auctus Alternative Investments | Diversified United vs. Clime Investment Management | Diversified United vs. Sonic Healthcare |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
Other Complementary Tools
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals | |
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios |