Correlation Between Kinetics Small and Floating Rate
Can any of the company-specific risk be diversified away by investing in both Kinetics Small and Floating Rate 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 Floating Rate 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 Floating Rate Fund, you can compare the effects of market volatilities on Kinetics Small and Floating Rate 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 Floating Rate. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kinetics Small and Floating Rate.
Diversification Opportunities for Kinetics Small and Floating Rate
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Kinetics and Floating is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Kinetics Small Cap and Floating Rate Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Floating Rate 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 Floating Rate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Floating Rate has no effect on the direction of Kinetics Small i.e., Kinetics Small and Floating Rate go up and down completely randomly.
Pair Corralation between Kinetics Small and Floating Rate
Assuming the 90 days horizon Kinetics Small Cap is expected to generate 16.53 times more return on investment than Floating Rate. However, Kinetics Small is 16.53 times more volatile than Floating Rate Fund. It trades about 0.2 of its potential returns per unit of risk. Floating Rate Fund is currently generating about 0.28 per unit of risk. If you would invest 14,397 in Kinetics Small Cap on September 12, 2024 and sell it today you would earn a total of 4,768 from holding Kinetics Small Cap or generate 33.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 98.44% |
| Values | Daily Returns |
Kinetics Small Cap vs. Floating Rate Fund
Performance |
| Timeline |
| Kinetics Small Cap |
| Floating Rate |
Kinetics Small and Floating Rate Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kinetics Small and Floating Rate
The main advantage of trading using opposite Kinetics Small and Floating Rate positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kinetics Small position performs unexpectedly, Floating Rate 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 Floating Rate will offset losses from the drop in Floating Rate's long position.| Kinetics Small vs. Royce Opportunity Fund | Kinetics Small vs. Victory Rs Partners | Kinetics Small vs. Applied Finance Explorer | Kinetics Small vs. Fidelity Small Cap |
| Floating Rate vs. Strategic Advisers Income | Floating Rate vs. Janus High Yield Fund | Floating Rate vs. T Rowe Price | Floating Rate vs. Pace High Yield |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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