Correlation Between Kinetics Small and Omni Small-cap
Can any of the company-specific risk be diversified away by investing in both Kinetics Small and Omni Small-cap 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 Omni Small-cap 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 Omni Small Cap Value, you can compare the effects of market volatilities on Kinetics Small and Omni Small-cap 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 Omni Small-cap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kinetics Small and Omni Small-cap.
Diversification Opportunities for Kinetics Small and Omni Small-cap
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Kinetics and Omni is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Kinetics Small Cap and Omni Small Cap Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Omni 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 Omni Small-cap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Omni Small Cap has no effect on the direction of Kinetics Small i.e., Kinetics Small and Omni Small-cap go up and down completely randomly.
Pair Corralation between Kinetics Small and Omni Small-cap
Assuming the 90 days horizon Kinetics Small Cap is expected to generate 1.77 times more return on investment than Omni Small-cap. However, Kinetics Small is 1.77 times more volatile than Omni Small Cap Value. It trades about 0.1 of its potential returns per unit of risk. Omni Small Cap Value is currently generating about 0.1 per unit of risk. If you would invest 18,624 in Kinetics Small Cap on November 7, 2024 and sell it today you would earn a total of 530.00 from holding Kinetics Small Cap or generate 2.85% 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. Omni Small Cap Value
Performance |
| Timeline |
| Kinetics Small Cap |
| Omni Small Cap |
Kinetics Small and Omni Small-cap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kinetics Small and Omni Small-cap
The main advantage of trading using opposite Kinetics Small and Omni Small-cap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kinetics Small position performs unexpectedly, Omni Small-cap 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 Omni Small-cap will offset losses from the drop in Omni Small-cap's long position.| Kinetics Small vs. Pace Smallmedium Value | Kinetics Small vs. Touchstone Small Cap | Kinetics Small vs. Small Pany Growth | Kinetics Small vs. Aqr Small Cap |
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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 Channel module to use Commodity Channel Index to analyze current equity momentum.
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