Correlation Between Kinetics Small and Smallcap Growth
Can any of the company-specific risk be diversified away by investing in both Kinetics Small and Smallcap Growth 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 Smallcap Growth 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 Smallcap Growth Fund, you can compare the effects of market volatilities on Kinetics Small and Smallcap Growth 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 Smallcap Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kinetics Small and Smallcap Growth.
Diversification Opportunities for Kinetics Small and Smallcap Growth
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Kinetics and Smallcap is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Kinetics Small Cap and Smallcap Growth Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Smallcap Growth 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 Smallcap Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Smallcap Growth has no effect on the direction of Kinetics Small i.e., Kinetics Small and Smallcap Growth go up and down completely randomly.
Pair Corralation between Kinetics Small and Smallcap Growth
Assuming the 90 days horizon Kinetics Small Cap is expected to generate 1.29 times more return on investment than Smallcap Growth. However, Kinetics Small is 1.29 times more volatile than Smallcap Growth Fund. It trades about 0.06 of its potential returns per unit of risk. Smallcap Growth Fund is currently generating about 0.06 per unit of risk. If you would invest 13,448 in Kinetics Small Cap on September 12, 2024 and sell it today you would earn a total of 6,458 from holding Kinetics Small Cap or generate 48.02% 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. Smallcap Growth Fund
Performance |
| Timeline |
| Kinetics Small Cap |
| Smallcap Growth |
Kinetics Small and Smallcap Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kinetics Small and Smallcap Growth
The main advantage of trading using opposite Kinetics Small and Smallcap Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kinetics Small position performs unexpectedly, Smallcap Growth 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 Smallcap Growth will offset losses from the drop in Smallcap Growth's long position.| Kinetics Small vs. Aqr Small Cap | Kinetics Small vs. Pace Smallmedium Value | Kinetics Small vs. Lebenthal Lisanti Small | Kinetics Small vs. Old Westbury Small |
| Smallcap Growth vs. Allianzgi Diversified Income | Smallcap Growth vs. Global Diversified Income | Smallcap Growth vs. Aqr Diversified Arbitrage | Smallcap Growth vs. Guggenheim Diversified Income |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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