Correlation Between Kinetics Small and Perkins Select
Can any of the company-specific risk be diversified away by investing in both Kinetics Small and Perkins Select 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 Perkins Select 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 Perkins Select Value, you can compare the effects of market volatilities on Kinetics Small and Perkins Select 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 Perkins Select. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kinetics Small and Perkins Select.
Diversification Opportunities for Kinetics Small and Perkins Select
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Kinetics and Perkins is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Kinetics Small Cap and Perkins Select Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Perkins Select 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 Perkins Select. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Perkins Select Value has no effect on the direction of Kinetics Small i.e., Kinetics Small and Perkins Select go up and down completely randomly.
Pair Corralation between Kinetics Small and Perkins Select
Assuming the 90 days horizon Kinetics Small Cap is expected to generate 1.95 times more return on investment than Perkins Select. However, Kinetics Small is 1.95 times more volatile than Perkins Select Value. It trades about 0.36 of its potential returns per unit of risk. Perkins Select Value is currently generating about 0.26 per unit of risk. If you would invest 18,530 in Kinetics Small Cap on September 2, 2024 and sell it today you would earn a total of 4,268 from holding Kinetics Small Cap or generate 23.03% 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. Perkins Select Value
Performance |
| Timeline |
| Kinetics Small Cap |
| Perkins Select Value |
Kinetics Small and Perkins Select Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kinetics Small and Perkins Select
The main advantage of trading using opposite Kinetics Small and Perkins Select positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kinetics Small position performs unexpectedly, Perkins Select 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 Perkins Select will offset losses from the drop in Perkins Select's long position.| Kinetics Small vs. Kinetics Paradigm Fund | Kinetics Small vs. Kinetics Market Opportunities | Kinetics Small vs. Pear Tree Polaris | Kinetics Small vs. Amg Managers Loomis |
| Perkins Select vs. Kinetics Small Cap | Perkins Select vs. Chase Growth Fund | Perkins Select vs. L Abbett Growth | Perkins Select vs. Legg Mason Partners |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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