Correlation Between Kinetics Small and Diamond Hill
Can any of the company-specific risk be diversified away by investing in both Kinetics Small and Diamond Hill 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 Diamond Hill 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 Diamond Hill Short, you can compare the effects of market volatilities on Kinetics Small and Diamond Hill 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 Diamond Hill. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kinetics Small and Diamond Hill.
Diversification Opportunities for Kinetics Small and Diamond Hill
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Kinetics and Diamond is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Kinetics Small Cap and Diamond Hill Short in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Diamond Hill Short 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 Diamond Hill. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Diamond Hill Short has no effect on the direction of Kinetics Small i.e., Kinetics Small and Diamond Hill go up and down completely randomly.
Pair Corralation between Kinetics Small and Diamond Hill
Assuming the 90 days horizon Kinetics Small Cap is expected to generate 21.48 times more return on investment than Diamond Hill. However, Kinetics Small is 21.48 times more volatile than Diamond Hill Short. It trades about 0.26 of its potential returns per unit of risk. Diamond Hill Short is currently generating about 0.37 per unit of risk. If you would invest 11,444 in Kinetics Small Cap on September 3, 2024 and sell it today you would earn a total of 11,354 from holding Kinetics Small Cap or generate 99.21% 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. Diamond Hill Short
Performance |
| Timeline |
| Kinetics Small Cap |
| Diamond Hill Short |
Kinetics Small and Diamond Hill Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kinetics Small and Diamond Hill
The main advantage of trading using opposite Kinetics Small and Diamond Hill positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kinetics Small position performs unexpectedly, Diamond Hill 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 Diamond Hill will offset losses from the drop in Diamond Hill's long position.| Kinetics Small vs. General Money Market | Kinetics Small vs. Matson Money Equity | Kinetics Small vs. Ashmore Emerging Markets | Kinetics Small vs. Aig Government Money |
| Diamond Hill vs. Qs Small Capitalization | Diamond Hill vs. Artisan Small Cap | Diamond Hill vs. Champlain Small | Diamond Hill vs. Kinetics 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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