Correlation Between Kinetics Small and American Funds
Can any of the company-specific risk be diversified away by investing in both Kinetics Small and American Funds 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 American Funds 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 American Funds 2020, you can compare the effects of market volatilities on Kinetics Small and American Funds 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 American Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kinetics Small and American Funds.
Diversification Opportunities for Kinetics Small and American Funds
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between Kinetics and American is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Kinetics Small Cap and American Funds 2020 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Funds 2020 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 American Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Funds 2020 has no effect on the direction of Kinetics Small i.e., Kinetics Small and American Funds go up and down completely randomly.
Pair Corralation between Kinetics Small and American Funds
Assuming the 90 days horizon Kinetics Small Cap is expected to generate 5.75 times more return on investment than American Funds. However, Kinetics Small is 5.75 times more volatile than American Funds 2020. It trades about 0.28 of its potential returns per unit of risk. American Funds 2020 is currently generating about 0.14 per unit of risk. If you would invest 11,781 in Kinetics Small Cap on September 3, 2024 and sell it today you would earn a total of 11,017 from holding Kinetics Small Cap or generate 93.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kinetics Small Cap vs. American Funds 2020
Performance |
| Timeline |
| Kinetics Small Cap |
| American Funds 2020 |
Kinetics Small and American Funds Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kinetics Small and American Funds
The main advantage of trading using opposite Kinetics Small and American Funds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kinetics Small position performs unexpectedly, American Funds 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 American Funds will offset losses from the drop in American Funds' 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 |
| American Funds vs. Us Small Cap | American Funds vs. Artisan Small Cap | American Funds vs. Kinetics Small Cap | American Funds vs. The Hartford Small |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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