Correlation Between Kinetics Small and Salient Tactical
Can any of the company-specific risk be diversified away by investing in both Kinetics Small and Salient Tactical 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 Salient Tactical 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 Salient Tactical Plus, you can compare the effects of market volatilities on Kinetics Small and Salient Tactical 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 Salient Tactical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kinetics Small and Salient Tactical.
Diversification Opportunities for Kinetics Small and Salient Tactical
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Kinetics and Salient is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Kinetics Small Cap and Salient Tactical Plus in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Salient Tactical Plus 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 Salient Tactical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Salient Tactical Plus has no effect on the direction of Kinetics Small i.e., Kinetics Small and Salient Tactical go up and down completely randomly.
Pair Corralation between Kinetics Small and Salient Tactical
Assuming the 90 days horizon Kinetics Small Cap is expected to generate 4.65 times more return on investment than Salient Tactical. However, Kinetics Small is 4.65 times more volatile than Salient Tactical Plus. It trades about 0.44 of its potential returns per unit of risk. Salient Tactical Plus is currently generating about 0.06 per unit of risk. If you would invest 17,841 in Kinetics Small Cap on August 29, 2024 and sell it today you would earn a total of 5,310 from holding Kinetics Small Cap or generate 29.76% 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. Salient Tactical Plus
Performance |
| Timeline |
| Kinetics Small Cap |
| Salient Tactical Plus |
Kinetics Small and Salient Tactical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kinetics Small and Salient Tactical
The main advantage of trading using opposite Kinetics Small and Salient Tactical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kinetics Small position performs unexpectedly, Salient Tactical 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 Salient Tactical will offset losses from the drop in Salient Tactical's long position.| Kinetics Small vs. Multisector Bond Sma | Kinetics Small vs. Icon Bond Fund | Kinetics Small vs. Ambrus Core Bond | Kinetics Small vs. Blrc Sgy Mnp |
| Salient Tactical vs. Lord Abbett Diversified | Salient Tactical vs. Pgim Jennison Diversified | Salient Tactical vs. Tiaa Cref Small Cap Blend | Salient Tactical vs. Wasatch Small Cap |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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