Correlation Between Kinetics Small and Pace International
Can any of the company-specific risk be diversified away by investing in both Kinetics Small and Pace International 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 Pace International 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 Pace International Emerging, you can compare the effects of market volatilities on Kinetics Small and Pace International 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 Pace International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kinetics Small and Pace International.
Diversification Opportunities for Kinetics Small and Pace International
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Kinetics and Pace is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Kinetics Small Cap and Pace International Emerging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pace International 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 Pace International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pace International has no effect on the direction of Kinetics Small i.e., Kinetics Small and Pace International go up and down completely randomly.
Pair Corralation between Kinetics Small and Pace International
Assuming the 90 days horizon Kinetics Small Cap is expected to generate 1.67 times more return on investment than Pace International. However, Kinetics Small is 1.67 times more volatile than Pace International Emerging. It trades about 0.08 of its potential returns per unit of risk. Pace International Emerging is currently generating about 0.04 per unit of risk. If you would invest 13,751 in Kinetics Small Cap on August 26, 2024 and sell it today you would earn a total of 10,236 from holding Kinetics Small Cap or generate 74.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kinetics Small Cap vs. Pace International Emerging
Performance |
| Timeline |
| Kinetics Small Cap |
| Pace International |
Kinetics Small and Pace International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kinetics Small and Pace International
The main advantage of trading using opposite Kinetics Small and Pace International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kinetics Small position performs unexpectedly, Pace International 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 Pace International will offset losses from the drop in Pace International's long position.| Kinetics Small vs. Aqr Large Cap | Kinetics Small vs. Qs Large Cap | Kinetics Small vs. Massmutual Select T | Kinetics Small vs. T Rowe Price |
| Pace International vs. Kinetics Small Cap | Pace International vs. Baird Smallmid Cap | Pace International vs. Small Pany Growth | Pace International vs. Omni Small Cap Value |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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