Correlation Between Kinetics Small and Alger Smallcap
Can any of the company-specific risk be diversified away by investing in both Kinetics Small and Alger Smallcap 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 Alger Smallcap 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 Alger Smallcap Growth, you can compare the effects of market volatilities on Kinetics Small and Alger Smallcap 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 Alger Smallcap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kinetics Small and Alger Smallcap.
Diversification Opportunities for Kinetics Small and Alger Smallcap
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Kinetics and Alger is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Kinetics Small Cap and Alger Smallcap Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alger Smallcap Growth 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 Alger Smallcap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alger Smallcap Growth has no effect on the direction of Kinetics Small i.e., Kinetics Small and Alger Smallcap go up and down completely randomly.
Pair Corralation between Kinetics Small and Alger Smallcap
Assuming the 90 days horizon Kinetics Small Cap is expected to generate 1.33 times more return on investment than Alger Smallcap. However, Kinetics Small is 1.33 times more volatile than Alger Smallcap Growth. It trades about 0.18 of its potential returns per unit of risk. Alger Smallcap Growth is currently generating about 0.12 per unit of risk. If you would invest 17,616 in Kinetics Small Cap on November 3, 2024 and sell it today you would earn a total of 1,058 from holding Kinetics Small Cap or generate 6.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kinetics Small Cap vs. Alger Smallcap Growth
Performance |
| Timeline |
| Kinetics Small Cap |
| Alger Smallcap Growth |
Kinetics Small and Alger Smallcap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kinetics Small and Alger Smallcap
The main advantage of trading using opposite Kinetics Small and Alger Smallcap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kinetics Small position performs unexpectedly, Alger Smallcap 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 Alger Smallcap will offset losses from the drop in Alger Smallcap'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 |
| Alger Smallcap vs. Western Asset Short | Alger Smallcap vs. Eagle Mlp Strategy | Alger Smallcap vs. Barings Active Short | Alger Smallcap vs. Aqr Sustainable Long 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 Global Correlations module to find global opportunities by holding instruments from different markets.
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