Correlation Between Kinetics Small and Iaadx

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

Diversification Opportunities for Kinetics Small and Iaadx

-0.51
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Kinetics and Iaadx is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Kinetics Small Cap and Iaadx in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Iaadx 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 Iaadx. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Iaadx has no effect on the direction of Kinetics Small i.e., Kinetics Small and Iaadx go up and down completely randomly.

Pair Corralation between Kinetics Small and Iaadx

Assuming the 90 days horizon Kinetics Small Cap is expected to under-perform the Iaadx. In addition to that, Kinetics Small is 28.48 times more volatile than Iaadx. It trades about -0.12 of its total potential returns per unit of risk. Iaadx is currently generating about 0.34 per unit of volatility. If you would invest  929.00  in Iaadx on September 13, 2024 and sell it today you would earn a total of  8.00  from holding Iaadx or generate 0.86% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Kinetics Small Cap  vs.  Iaadx

 Performance 
       Timeline  
Kinetics Small Cap 

Risk-Adjusted Performance

15 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Kinetics Small Cap are ranked lower than 15 (%) 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.
Iaadx 

Risk-Adjusted Performance

2 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Iaadx are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Iaadx is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Kinetics Small and Iaadx Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Kinetics Small and Iaadx

The main advantage of trading using opposite Kinetics Small and Iaadx positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kinetics Small position performs unexpectedly, Iaadx 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 Iaadx will offset losses from the drop in Iaadx's long position.
The idea behind Kinetics Small Cap and Iaadx 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.
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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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.

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