Correlation Between Kinetics Small and Leggmason Partners
Can any of the company-specific risk be diversified away by investing in both Kinetics Small and Leggmason Partners 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 Leggmason Partners 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 Leggmason Partners Institutional, you can compare the effects of market volatilities on Kinetics Small and Leggmason Partners 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 Leggmason Partners. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kinetics Small and Leggmason Partners.
Diversification Opportunities for Kinetics Small and Leggmason Partners
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between Kinetics and Leggmason is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Kinetics Small Cap and Leggmason Partners Institution in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Leggmason Partners 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 Leggmason Partners. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Leggmason Partners has no effect on the direction of Kinetics Small i.e., Kinetics Small and Leggmason Partners go up and down completely randomly.
Pair Corralation between Kinetics Small and Leggmason Partners
Assuming the 90 days horizon Kinetics Small Cap is expected to generate 2.39 times more return on investment than Leggmason Partners. However, Kinetics Small is 2.39 times more volatile than Leggmason Partners Institutional. It trades about 0.09 of its potential returns per unit of risk. Leggmason Partners Institutional is currently generating about 0.02 per unit of risk. If you would invest 12,589 in Kinetics Small Cap on September 3, 2024 and sell it today you would earn a total of 10,209 from holding Kinetics Small Cap or generate 81.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.16% |
| Values | Daily Returns |
Kinetics Small Cap vs. Leggmason Partners Institution
Performance |
| Timeline |
| Kinetics Small Cap |
| Leggmason Partners |
Kinetics Small and Leggmason Partners Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kinetics Small and Leggmason Partners
The main advantage of trading using opposite Kinetics Small and Leggmason Partners positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kinetics Small position performs unexpectedly, Leggmason Partners 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 Leggmason Partners will offset losses from the drop in Leggmason Partners' long position.| Kinetics Small vs. General Money Market | Kinetics Small vs. Matson Money Equity | Kinetics Small vs. Ashmore Emerging Markets | Kinetics Small vs. Aig Government Money |
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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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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