Correlation Between Kinetics Small and Driehaus Emerging
Can any of the company-specific risk be diversified away by investing in both Kinetics Small and Driehaus Emerging 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 Driehaus Emerging 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 Driehaus Emerging Markets, you can compare the effects of market volatilities on Kinetics Small and Driehaus Emerging 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 Driehaus Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kinetics Small and Driehaus Emerging.
Diversification Opportunities for Kinetics Small and Driehaus Emerging
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Kinetics and Driehaus is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Kinetics Small Cap and Driehaus Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Driehaus Emerging Markets 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 Driehaus Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Driehaus Emerging Markets has no effect on the direction of Kinetics Small i.e., Kinetics Small and Driehaus Emerging go up and down completely randomly.
Pair Corralation between Kinetics Small and Driehaus Emerging
Assuming the 90 days horizon Kinetics Small Cap is expected to under-perform the Driehaus Emerging. In addition to that, Kinetics Small is 2.08 times more volatile than Driehaus Emerging Markets. It trades about -0.04 of its total potential returns per unit of risk. Driehaus Emerging Markets is currently generating about -0.01 per unit of volatility. If you would invest 2,097 in Driehaus Emerging Markets on January 18, 2025 and sell it today you would lose (22.00) from holding Driehaus Emerging Markets or give up 1.05% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kinetics Small Cap vs. Driehaus Emerging Markets
Performance |
| Timeline |
| Kinetics Small Cap |
| Driehaus Emerging Markets |
Kinetics Small and Driehaus Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kinetics Small and Driehaus Emerging
The main advantage of trading using opposite Kinetics Small and Driehaus Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kinetics Small position performs unexpectedly, Driehaus Emerging 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 Driehaus Emerging will offset losses from the drop in Driehaus Emerging'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 |
| Driehaus Emerging vs. Vanguard Emerging Markets | Driehaus Emerging vs. Vanguard Emerging Markets | Driehaus Emerging vs. Vanguard Emerging Markets | Driehaus Emerging vs. Vanguard Emerging Markets |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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