Correlation Between Kinetics Small and Harbor Small

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Kinetics Small and Harbor Small 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 Harbor Small 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 Harbor Small Cap, you can compare the effects of market volatilities on Kinetics Small and Harbor Small 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 Harbor Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kinetics Small and Harbor Small.

Diversification Opportunities for Kinetics Small and Harbor Small

0.86
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Kinetics and Harbor is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Kinetics Small Cap and Harbor Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Harbor 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 Harbor Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Harbor Small Cap has no effect on the direction of Kinetics Small i.e., Kinetics Small and Harbor Small go up and down completely randomly.

Pair Corralation between Kinetics Small and Harbor Small

Assuming the 90 days horizon Kinetics Small Cap is expected to generate 1.57 times more return on investment than Harbor Small. However, Kinetics Small is 1.57 times more volatile than Harbor Small Cap. It trades about 0.14 of its potential returns per unit of risk. Harbor Small Cap is currently generating about 0.06 per unit of risk. If you would invest  11,263  in Kinetics Small Cap on September 12, 2024 and sell it today you would earn a total of  8,643  from holding Kinetics Small Cap or generate 76.74% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

Kinetics Small Cap  vs.  Harbor Small Cap

 Performance 
       Timeline  
Kinetics Small Cap 

Risk-Adjusted Performance

18 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Kinetics Small Cap are ranked lower than 18 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Kinetics Small showed solid returns over the last few months and may actually be approaching a breakup point.
Harbor Small Cap 

Risk-Adjusted Performance

8 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Harbor Small Cap are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Harbor Small may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Kinetics Small and Harbor Small Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Kinetics Small and Harbor Small

The main advantage of trading using opposite Kinetics Small and Harbor Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kinetics Small position performs unexpectedly, Harbor Small 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 Harbor Small will offset losses from the drop in Harbor Small's long position.
The idea behind Kinetics Small Cap and Harbor Small Cap pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.

Other Complementary Tools

Stock Tickers
Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites
Commodity Directory
Find actively traded commodities issued by global exchanges
Portfolio Dashboard
Portfolio dashboard that provides centralized access to all your investments
Portfolio Suggestion
Get suggestions outside of your existing asset allocation including your own model portfolios
Portfolio Diagnostics
Use generated alerts and portfolio events aggregator to diagnose current holdings