Correlation Between Kinetics Small and Nicholas
Can any of the company-specific risk be diversified away by investing in both Kinetics Small and Nicholas 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 Nicholas 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 Nicholas Ltd Edition, you can compare the effects of market volatilities on Kinetics Small and Nicholas 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 Nicholas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kinetics Small and Nicholas.
Diversification Opportunities for Kinetics Small and Nicholas
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Kinetics and Nicholas is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Kinetics Small Cap and Nicholas Ltd Edition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nicholas Edition 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 Nicholas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nicholas Edition has no effect on the direction of Kinetics Small i.e., Kinetics Small and Nicholas go up and down completely randomly.
Pair Corralation between Kinetics Small and Nicholas
Assuming the 90 days horizon Kinetics Small Cap is expected to generate 1.86 times more return on investment than Nicholas. However, Kinetics Small is 1.86 times more volatile than Nicholas Ltd Edition. It trades about 0.28 of its potential returns per unit of risk. Nicholas Ltd Edition is currently generating about 0.13 per unit of risk. If you would invest 11,476 in Kinetics Small Cap on September 1, 2024 and sell it today you would earn a total of 11,090 from holding Kinetics Small Cap or generate 96.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 99.21% |
| Values | Daily Returns |
Kinetics Small Cap vs. Nicholas Ltd Edition
Performance |
| Timeline |
| Kinetics Small Cap |
| Nicholas Edition |
Kinetics Small and Nicholas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kinetics Small and Nicholas
The main advantage of trading using opposite Kinetics Small and Nicholas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kinetics Small position performs unexpectedly, Nicholas 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 Nicholas will offset losses from the drop in Nicholas' 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 |
| Nicholas vs. Dreyfus Government Cash | Nicholas vs. Prudential Government Income | Nicholas vs. Lord Abbett Government | Nicholas vs. Government Securities 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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