Correlation Between Kinetics Small and Aqr Sustainable
Can any of the company-specific risk be diversified away by investing in both Kinetics Small and Aqr Sustainable 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 Aqr Sustainable 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 Aqr Sustainable Long Short, you can compare the effects of market volatilities on Kinetics Small and Aqr Sustainable 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 Aqr Sustainable. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kinetics Small and Aqr Sustainable.
Diversification Opportunities for Kinetics Small and Aqr Sustainable
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Kinetics and Aqr is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Kinetics Small Cap and Aqr Sustainable Long Short in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aqr Sustainable Long 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 Aqr Sustainable. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aqr Sustainable Long has no effect on the direction of Kinetics Small i.e., Kinetics Small and Aqr Sustainable go up and down completely randomly.
Pair Corralation between Kinetics Small and Aqr Sustainable
Assuming the 90 days horizon Kinetics Small Cap is expected to generate 3.18 times more return on investment than Aqr Sustainable. However, Kinetics Small is 3.18 times more volatile than Aqr Sustainable Long Short. It trades about 0.2 of its potential returns per unit of risk. Aqr Sustainable Long Short is currently generating about 0.15 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 | 100.0% |
| Values | Daily Returns |
Kinetics Small Cap vs. Aqr Sustainable Long Short
Performance |
| Timeline |
| Kinetics Small Cap |
| Aqr Sustainable Long |
Kinetics Small and Aqr Sustainable Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kinetics Small and Aqr Sustainable
The main advantage of trading using opposite Kinetics Small and Aqr Sustainable positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kinetics Small position performs unexpectedly, Aqr Sustainable 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 Aqr Sustainable will offset losses from the drop in Aqr Sustainable'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 |
| Aqr Sustainable vs. Eip Growth And | Aqr Sustainable vs. Qs Moderate Growth | Aqr Sustainable vs. Small Pany Growth | Aqr Sustainable vs. Champlain Mid Cap |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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