Correlation Between Kinetics Small and West Loop
Can any of the company-specific risk be diversified away by investing in both Kinetics Small and West Loop 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 West Loop 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 West Loop Realty, you can compare the effects of market volatilities on Kinetics Small and West Loop 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 West Loop. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kinetics Small and West Loop.
Diversification Opportunities for Kinetics Small and West Loop
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Kinetics and West is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Kinetics Small Cap and West Loop Realty in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on West Loop Realty 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 West Loop. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of West Loop Realty has no effect on the direction of Kinetics Small i.e., Kinetics Small and West Loop go up and down completely randomly.
Pair Corralation between Kinetics Small and West Loop
Assuming the 90 days horizon Kinetics Small Cap is expected to generate 3.17 times more return on investment than West Loop. However, Kinetics Small is 3.17 times more volatile than West Loop Realty. It trades about 0.36 of its potential returns per unit of risk. West Loop Realty is currently generating about 0.27 per unit of risk. If you would invest 18,064 in Kinetics Small Cap on September 2, 2024 and sell it today you would earn a total of 4,157 from holding Kinetics Small Cap or generate 23.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kinetics Small Cap vs. West Loop Realty
Performance |
| Timeline |
| Kinetics Small Cap |
| West Loop Realty |
Kinetics Small and West Loop Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kinetics Small and West Loop
The main advantage of trading using opposite Kinetics Small and West Loop positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kinetics Small position performs unexpectedly, West Loop 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 West Loop will offset losses from the drop in West Loop'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 |
| West Loop vs. Guggenheim Risk Managed | West Loop vs. Guggenheim Risk Managed | West Loop vs. Real Estate Fund | West Loop vs. Simt Managed Volatility |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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