Correlation Between Kinetics Small and Cavanal Hillultra
Can any of the company-specific risk be diversified away by investing in both Kinetics Small and Cavanal Hillultra 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 Small and Cavanal Hillultra into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kinetics Small Cap and Cavanal Hillultra Short, you can compare the effects of market volatilities on Kinetics Small and Cavanal Hillultra 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 Small with a short position of Cavanal Hillultra. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kinetics Small and Cavanal Hillultra.
Diversification Opportunities for Kinetics Small and Cavanal Hillultra
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Kinetics and Cavanal is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Kinetics Small Cap and Cavanal Hillultra Short in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cavanal Hillultra Short and Kinetics Small 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 Small Cap are associated (or correlated) with Cavanal Hillultra. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cavanal Hillultra Short has no effect on the direction of Kinetics Small i.e., Kinetics Small and Cavanal Hillultra go up and down completely randomly.
Pair Corralation between Kinetics Small and Cavanal Hillultra
Assuming the 90 days horizon Kinetics Small Cap is expected to generate 27.06 times more return on investment than Cavanal Hillultra. However, Kinetics Small is 27.06 times more volatile than Cavanal Hillultra Short. It trades about 0.19 of its potential returns per unit of risk. Cavanal Hillultra Short is currently generating about 0.21 per unit of risk. If you would invest 10,656 in Kinetics Small Cap on September 2, 2024 and sell it today you would earn a total of 11,565 from holding Kinetics Small Cap or generate 108.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kinetics Small Cap vs. Cavanal Hillultra Short
Performance |
| Timeline |
| Kinetics Small Cap |
| Cavanal Hillultra Short |
Kinetics Small and Cavanal Hillultra Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kinetics Small and Cavanal Hillultra
The main advantage of trading using opposite Kinetics Small and Cavanal Hillultra positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kinetics Small position performs unexpectedly, Cavanal Hillultra 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 Cavanal Hillultra will offset losses from the drop in Cavanal Hillultra's long position.| Kinetics Small vs. Kinetics Paradigm Fund | Kinetics Small vs. Kinetics Market Opportunities | Kinetics Small vs. Pear Tree Polaris | Kinetics Small vs. Amg Managers Loomis |
| Cavanal Hillultra vs. Bond Fund Investor | Cavanal Hillultra vs. Strategic Enhanced Yield | Cavanal Hillultra vs. Cavanal Hill Hedged | Cavanal Hillultra vs. Limited Duration Fund |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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