Correlation Between Kinetics Small and Gotham Enhanced
Can any of the company-specific risk be diversified away by investing in both Kinetics Small and Gotham Enhanced 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 Gotham Enhanced 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 Gotham Enhanced 500, you can compare the effects of market volatilities on Kinetics Small and Gotham Enhanced 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 Gotham Enhanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kinetics Small and Gotham Enhanced.
Diversification Opportunities for Kinetics Small and Gotham Enhanced
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Kinetics and Gotham is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Kinetics Small Cap and Gotham Enhanced 500 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gotham Enhanced 500 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 Gotham Enhanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gotham Enhanced 500 has no effect on the direction of Kinetics Small i.e., Kinetics Small and Gotham Enhanced go up and down completely randomly.
Pair Corralation between Kinetics Small and Gotham Enhanced
Assuming the 90 days horizon Kinetics Small Cap is expected to generate 2.72 times more return on investment than Gotham Enhanced. However, Kinetics Small is 2.72 times more volatile than Gotham Enhanced 500. It trades about 0.01 of its potential returns per unit of risk. Gotham Enhanced 500 is currently generating about -0.02 per unit of risk. If you would invest 18,371 in Kinetics Small Cap on November 28, 2024 and sell it today you would earn a total of 20.00 from holding Kinetics Small Cap or generate 0.11% 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. Gotham Enhanced 500
Performance |
| Timeline |
| Kinetics Small Cap |
| Gotham Enhanced 500 |
Kinetics Small and Gotham Enhanced Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kinetics Small and Gotham Enhanced
The main advantage of trading using opposite Kinetics Small and Gotham Enhanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kinetics Small position performs unexpectedly, Gotham Enhanced 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 Gotham Enhanced will offset losses from the drop in Gotham Enhanced'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 |
| Gotham Enhanced vs. Small Pany Growth | Gotham Enhanced vs. Intal High Relative | Gotham Enhanced vs. Alternative Asset Allocation | Gotham Enhanced vs. Arrow Managed Futures |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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