Correlation Between Kinetics Small and Avantis Us
Can any of the company-specific risk be diversified away by investing in both Kinetics Small and Avantis Us 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 Avantis Us 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 Avantis Small Cap, you can compare the effects of market volatilities on Kinetics Small and Avantis Us 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 Avantis Us. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kinetics Small and Avantis Us.
Diversification Opportunities for Kinetics Small and Avantis Us
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Kinetics and Avantis is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Kinetics Small Cap and Avantis Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avantis Small Cap 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 Avantis Us. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Avantis Small Cap has no effect on the direction of Kinetics Small i.e., Kinetics Small and Avantis Us go up and down completely randomly.
Pair Corralation between Kinetics Small and Avantis Us
Assuming the 90 days horizon Kinetics Small Cap is expected to generate 1.18 times more return on investment than Avantis Us. However, Kinetics Small is 1.18 times more volatile than Avantis Small Cap. It trades about 0.06 of its potential returns per unit of risk. Avantis Small Cap is currently generating about 0.04 per unit of risk. If you would invest 12,642 in Kinetics Small Cap on October 7, 2024 and sell it today you would earn a total of 5,804 from holding Kinetics Small Cap or generate 45.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kinetics Small Cap vs. Avantis Small Cap
Performance |
| Timeline |
| Kinetics Small Cap |
| Avantis Small Cap |
Kinetics Small and Avantis Us Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kinetics Small and Avantis Us
The main advantage of trading using opposite Kinetics Small and Avantis Us positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kinetics Small position performs unexpectedly, Avantis Us 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 Avantis Us will offset losses from the drop in Avantis Us' long position.| Kinetics Small vs. Vanguard Explorer Fund | Kinetics Small vs. SCOR PK | Kinetics Small vs. Aquagold International | Kinetics Small vs. SPACE |
| Avantis Us vs. Northern Small Cap | Avantis Us vs. Delaware Limited Term Diversified | Avantis Us vs. Tax Managed Mid Small | Avantis Us vs. Lord Abbett Diversified |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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