Correlation Between Kinetics Small and Brandes Global
Can any of the company-specific risk be diversified away by investing in both Kinetics Small and Brandes Global 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 Brandes Global 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 Brandes Global Equity, you can compare the effects of market volatilities on Kinetics Small and Brandes Global 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 Brandes Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kinetics Small and Brandes Global.
Diversification Opportunities for Kinetics Small and Brandes Global
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Kinetics and Brandes is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Kinetics Small Cap and Brandes Global Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brandes Global Equity 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 Brandes Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brandes Global Equity has no effect on the direction of Kinetics Small i.e., Kinetics Small and Brandes Global go up and down completely randomly.
Pair Corralation between Kinetics Small and Brandes Global
Assuming the 90 days horizon Kinetics Small Cap is expected to generate 2.35 times more return on investment than Brandes Global. However, Kinetics Small is 2.35 times more volatile than Brandes Global Equity. It trades about 0.12 of its potential returns per unit of risk. Brandes Global Equity is currently generating about 0.08 per unit of risk. If you would invest 10,586 in Kinetics Small Cap on September 12, 2024 and sell it today you would earn a total of 9,320 from holding Kinetics Small Cap or generate 88.04% 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. Brandes Global Equity
Performance |
| Timeline |
| Kinetics Small Cap |
| Brandes Global Equity |
Kinetics Small and Brandes Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kinetics Small and Brandes Global
The main advantage of trading using opposite Kinetics Small and Brandes Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kinetics Small position performs unexpectedly, Brandes Global 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 Brandes Global will offset losses from the drop in Brandes Global's long position.| Kinetics Small vs. Aqr Small Cap | Kinetics Small vs. Pace Smallmedium Value | Kinetics Small vs. Lebenthal Lisanti Small | Kinetics Small vs. Old Westbury Small |
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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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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