Correlation Between Kinetics Small and New Perspective
Can any of the company-specific risk be diversified away by investing in both Kinetics Small and New Perspective 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 New Perspective 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 New Perspective Fund, you can compare the effects of market volatilities on Kinetics Small and New Perspective 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 New Perspective. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kinetics Small and New Perspective.
Diversification Opportunities for Kinetics Small and New Perspective
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Kinetics and New is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Kinetics Small Cap and New Perspective Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Perspective 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 New Perspective. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Perspective has no effect on the direction of Kinetics Small i.e., Kinetics Small and New Perspective go up and down completely randomly.
Pair Corralation between Kinetics Small and New Perspective
Assuming the 90 days horizon Kinetics Small Cap is expected to generate 3.77 times more return on investment than New Perspective. However, Kinetics Small is 3.77 times more volatile than New Perspective Fund. It trades about 0.46 of its potential returns per unit of risk. New Perspective Fund is currently generating about 0.03 per unit of risk. If you would invest 17,841 in Kinetics Small Cap on August 28, 2024 and sell it today you would earn a total of 5,035 from holding Kinetics Small Cap or generate 28.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Kinetics Small Cap vs. New Perspective Fund
Performance |
| Timeline |
| Kinetics Small Cap |
| New Perspective |
Kinetics Small and New Perspective Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kinetics Small and New Perspective
The main advantage of trading using opposite Kinetics Small and New Perspective positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kinetics Small position performs unexpectedly, New Perspective 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 New Perspective will offset losses from the drop in New Perspective's long position.| Kinetics Small vs. Oil Gas Ultrasector | Kinetics Small vs. Clearbridge Energy Mlp | Kinetics Small vs. Dreyfus Natural Resources | Kinetics Small vs. Franklin Natural Resources |
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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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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