Correlation Between Kinetics Small and Jensen Quality
Can any of the company-specific risk be diversified away by investing in both Kinetics Small and Jensen Quality 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 Jensen Quality 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 Jensen Quality Value, you can compare the effects of market volatilities on Kinetics Small and Jensen Quality 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 Jensen Quality. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kinetics Small and Jensen Quality.
Diversification Opportunities for Kinetics Small and Jensen Quality
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Kinetics and Jensen is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Kinetics Small Cap and Jensen Quality Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jensen Quality Value 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 Jensen Quality. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jensen Quality Value has no effect on the direction of Kinetics Small i.e., Kinetics Small and Jensen Quality go up and down completely randomly.
Pair Corralation between Kinetics Small and Jensen Quality
Assuming the 90 days horizon Kinetics Small Cap is expected to generate 2.31 times more return on investment than Jensen Quality. However, Kinetics Small is 2.31 times more volatile than Jensen Quality Value. It trades about 0.11 of its potential returns per unit of risk. Jensen Quality Value is currently generating about -0.06 per unit of risk. If you would invest 17,530 in Kinetics Small Cap on October 26, 2024 and sell it today you would earn a total of 2,778 from holding Kinetics Small Cap or generate 15.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kinetics Small Cap vs. Jensen Quality Value
Performance |
| Timeline |
| Kinetics Small Cap |
| Jensen Quality Value |
Kinetics Small and Jensen Quality Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kinetics Small and Jensen Quality
The main advantage of trading using opposite Kinetics Small and Jensen Quality positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kinetics Small position performs unexpectedly, Jensen Quality 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 Jensen Quality will offset losses from the drop in Jensen Quality's long position.| Kinetics Small vs. Kinetics Global Fund | Kinetics Small vs. Kinetics Global Fund | Kinetics Small vs. Kinetics Paradigm Fund | Kinetics Small vs. Kinetics Internet Fund |
| Jensen Quality vs. Touchstone Small Cap | Jensen Quality vs. Franklin Small Cap | Jensen Quality vs. Kinetics Small Cap | Jensen Quality vs. Goldman Sachs Smallmid |
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.
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