Correlation Between Kinetics Small and Gmo Emerging
Can any of the company-specific risk be diversified away by investing in both Kinetics Small and Gmo Emerging 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 Gmo Emerging 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 Gmo Emerging Markets, you can compare the effects of market volatilities on Kinetics Small and Gmo Emerging 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 Gmo Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kinetics Small and Gmo Emerging.
Diversification Opportunities for Kinetics Small and Gmo Emerging
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Kinetics and Gmo is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Kinetics Small Cap and Gmo Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gmo Emerging Markets 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 Gmo Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gmo Emerging Markets has no effect on the direction of Kinetics Small i.e., Kinetics Small and Gmo Emerging go up and down completely randomly.
Pair Corralation between Kinetics Small and Gmo Emerging
Assuming the 90 days horizon Kinetics Small Cap is expected to generate 1.76 times more return on investment than Gmo Emerging. However, Kinetics Small is 1.76 times more volatile than Gmo Emerging Markets. It trades about 0.09 of its potential returns per unit of risk. Gmo Emerging Markets is currently generating about 0.04 per unit of risk. If you would invest 12,589 in Kinetics Small Cap on September 3, 2024 and sell it today you would earn a total of 10,209 from holding Kinetics Small Cap or generate 81.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kinetics Small Cap vs. Gmo Emerging Markets
Performance |
| Timeline |
| Kinetics Small Cap |
| Gmo Emerging Markets |
Kinetics Small and Gmo Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kinetics Small and Gmo Emerging
The main advantage of trading using opposite Kinetics Small and Gmo Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kinetics Small position performs unexpectedly, Gmo Emerging 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 Gmo Emerging will offset losses from the drop in Gmo Emerging'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 |
| Gmo Emerging vs. Maryland Tax Free Bond | Gmo Emerging vs. Gmo High Yield | Gmo Emerging vs. Dreyfusstandish Global Fixed | Gmo Emerging vs. Calamos Dynamic Convertible |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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