Correlation Between Kinetics Small and Kinetics Market
Can any of the company-specific risk be diversified away by investing in both Kinetics Small and Kinetics Market 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 Kinetics Market 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 Kinetics Market Opportunities, you can compare the effects of market volatilities on Kinetics Small and Kinetics Market 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 Kinetics Market. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kinetics Small and Kinetics Market.
Diversification Opportunities for Kinetics Small and Kinetics Market
1.0 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Kinetics and Kinetics is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding Kinetics Small Cap and Kinetics Market Opportunities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kinetics Market Oppo 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 Kinetics Market. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kinetics Market Oppo has no effect on the direction of Kinetics Small i.e., Kinetics Small and Kinetics Market go up and down completely randomly.
Pair Corralation between Kinetics Small and Kinetics Market
Assuming the 90 days horizon Kinetics Small is expected to generate 1.2 times less return on investment than Kinetics Market. But when comparing it to its historical volatility, Kinetics Small Cap is 1.05 times less risky than Kinetics Market. It trades about 0.42 of its potential returns per unit of risk. Kinetics Market Opportunities is currently generating about 0.47 of returns per unit of risk over similar time horizon. If you would invest 6,763 in Kinetics Market Opportunities on August 30, 2024 and sell it today you would earn a total of 2,325 from holding Kinetics Market Opportunities or generate 34.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kinetics Small Cap vs. Kinetics Market Opportunities
Performance |
| Timeline |
| Kinetics Small Cap |
| Kinetics Market Oppo |
Kinetics Small and Kinetics Market Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kinetics Small and Kinetics Market
The main advantage of trading using opposite Kinetics Small and Kinetics Market positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kinetics Small position performs unexpectedly, Kinetics Market 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 Kinetics Market will offset losses from the drop in Kinetics Market'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 |
| Kinetics Market vs. Kinetics Global Fund | Kinetics Market vs. Kinetics Global Fund | Kinetics Market vs. Kinetics Paradigm Fund | Kinetics Market vs. Kinetics Internet Fund |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
Other Complementary Tools
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon |