Correlation Between Kinetics Market and Small Cap
Can any of the company-specific risk be diversified away by investing in both Kinetics Market 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 Kinetics Market and Small Cap into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kinetics Market Opportunities and Small Cap Stock, you can compare the effects of market volatilities on Kinetics Market 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 Kinetics Market with a short position of Small Cap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kinetics Market and Small Cap.
Diversification Opportunities for Kinetics Market and Small Cap
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Kinetics and Small is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Kinetics Market Opportunities and Small Cap Stock in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Small Cap Stock and Kinetics Market 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 Kinetics Market Opportunities 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 Stock has no effect on the direction of Kinetics Market i.e., Kinetics Market and Small Cap go up and down completely randomly.
Pair Corralation between Kinetics Market and Small Cap
Assuming the 90 days horizon Kinetics Market Opportunities is expected to generate 2.04 times more return on investment than Small Cap. However, Kinetics Market is 2.04 times more volatile than Small Cap Stock. It trades about 0.16 of its potential returns per unit of risk. Small Cap Stock is currently generating about 0.07 per unit of risk. If you would invest 6,479 in Kinetics Market Opportunities on September 13, 2024 and sell it today you would earn a total of 1,197 from holding Kinetics Market Opportunities or generate 18.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kinetics Market Opportunities vs. Small Cap Stock
Performance |
| Timeline |
| Kinetics Market Oppo |
| Small Cap Stock |
Kinetics Market and Small Cap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kinetics Market and Small Cap
The main advantage of trading using opposite Kinetics Market and Small Cap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kinetics Market 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.| Kinetics Market vs. Blackrock Science Technology | Kinetics Market vs. Biotechnology Ultrasector Profund | Kinetics Market vs. Pgim Jennison Technology | Kinetics Market vs. Technology Ultrasector Profund |
| Small Cap vs. Goldman Sachs Real | Small Cap vs. Fidelity Real Estate | Small Cap vs. Redwood Real Estate | Small Cap vs. Vy Clarion Real |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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