Correlation Between Kensington Managed and Government Securities
Can any of the company-specific risk be diversified away by investing in both Kensington Managed and Government Securities 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 Managed and Government Securities into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kensington Managed Income and Government Securities Fund, you can compare the effects of market volatilities on Kensington Managed and Government Securities 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 Managed with a short position of Government Securities. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kensington Managed and Government Securities.
Diversification Opportunities for Kensington Managed and Government Securities
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between Kensington and Government is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Kensington Managed Income and Government Securities Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Government Securities and Kensington Managed 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 Managed Income are associated (or correlated) with Government Securities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Government Securities has no effect on the direction of Kensington Managed i.e., Kensington Managed and Government Securities go up and down completely randomly.
Pair Corralation between Kensington Managed and Government Securities
Assuming the 90 days horizon Kensington Managed is expected to generate 1.35 times less return on investment than Government Securities. But when comparing it to its historical volatility, Kensington Managed Income is 1.62 times less risky than Government Securities. It trades about 0.16 of its potential returns per unit of risk. Government Securities Fund is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 880.00 in Government Securities Fund on September 12, 2024 and sell it today you would earn a total of 6.00 from holding Government Securities Fund or generate 0.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kensington Managed Income vs. Government Securities Fund
Performance |
| Timeline |
| Kensington Managed Income |
| Government Securities |
Kensington Managed and Government Securities Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kensington Managed and Government Securities
The main advantage of trading using opposite Kensington Managed and Government Securities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kensington Managed position performs unexpectedly, Government Securities 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 Government Securities will offset losses from the drop in Government Securities' long position.| Kensington Managed vs. Franklin Federal Limited Term | Kensington Managed vs. Prudential Short Duration | Kensington Managed vs. Siit Ultra Short | Kensington Managed vs. Alpine Ultra Short |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
Other Complementary Tools
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments |