Correlation Between Kinetics Small and Us Government
Can any of the company-specific risk be diversified away by investing in both Kinetics Small and Us Government 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 Us Government 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 Us Government Securities, you can compare the effects of market volatilities on Kinetics Small and Us Government 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 Us Government. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kinetics Small and Us Government.
Diversification Opportunities for Kinetics Small and Us Government
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Kinetics and RGVAX is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Kinetics Small Cap and Us Government Securities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Us Government Securities 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 Us Government. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Us Government Securities has no effect on the direction of Kinetics Small i.e., Kinetics Small and Us Government go up and down completely randomly.
Pair Corralation between Kinetics Small and Us Government
Assuming the 90 days horizon Kinetics Small Cap is expected to generate 6.74 times more return on investment than Us Government. However, Kinetics Small is 6.74 times more volatile than Us Government Securities. It trades about 0.13 of its potential returns per unit of risk. Us Government Securities is currently generating about -0.02 per unit of risk. If you would invest 14,052 in Kinetics Small Cap on December 4, 2024 and sell it today you would earn a total of 5,234 from holding Kinetics Small Cap or generate 37.25% 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. Us Government Securities
Performance |
| Timeline |
| Kinetics Small Cap |
| Us Government Securities |
Kinetics Small and Us Government Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kinetics Small and Us Government
The main advantage of trading using opposite Kinetics Small and Us Government positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kinetics Small position performs unexpectedly, Us Government 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 Us Government will offset losses from the drop in Us Government's long position.| Kinetics Small vs. Stone Ridge Diversified | Kinetics Small vs. Federated Hermes Conservative | Kinetics Small vs. Manning Napier Diversified | Kinetics Small vs. Calvert Conservative Allocation |
| Us Government vs. Blackrock Health Sciences | Us Government vs. Blackrock Health Sciences | Us Government vs. Schwab Health Care | Us Government vs. Health Care Fund |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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