Correlation Between Kirklands and Small Cap
Can any of the company-specific risk be diversified away by investing in both Kirklands and Small Cap 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 Kirklands and Small Cap into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kirklands and Small Cap Core, you can compare the effects of market volatilities on Kirklands and Small Cap 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 Kirklands with a short position of Small Cap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kirklands and Small Cap.
Diversification Opportunities for Kirklands and Small Cap
Almost no diversification
The 3 months correlation between Kirklands and Small is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Kirklands and Small Cap Core in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Small Cap Core and Kirklands 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 Kirklands are associated (or correlated) with Small Cap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Small Cap Core has no effect on the direction of Kirklands i.e., Kirklands and Small Cap go up and down completely randomly.
Pair Corralation between Kirklands and Small Cap
Given the investment horizon of 90 days Kirklands is expected to under-perform the Small Cap. In addition to that, Kirklands is 2.82 times more volatile than Small Cap Core. It trades about -0.02 of its total potential returns per unit of risk. Small Cap Core is currently generating about -0.01 per unit of volatility. If you would invest 1,168 in Small Cap Core on January 19, 2025 and sell it today you would lose (151.00) from holding Small Cap Core or give up 12.93% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kirklands vs. Small Cap Core
Performance |
| Timeline |
| Kirklands |
| Small Cap Core |
Kirklands and Small Cap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kirklands and Small Cap
The main advantage of trading using opposite Kirklands and Small Cap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kirklands position performs unexpectedly, Small Cap 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 Small Cap will offset losses from the drop in Small Cap's long position.| Kirklands vs. Floor Decor Holdings | Kirklands vs. Arhaus Inc | Kirklands vs. Haverty Furniture Companies | Kirklands vs. Lowes Companies |
| Small Cap vs. Angel Oak Ultrashort | Small Cap vs. Rbc Short Duration | Small Cap vs. Transam Short Term Bond | Small Cap vs. Prudential Short Term Porate |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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