Correlation Between Kinetics Small and Smallcap World
Can any of the company-specific risk be diversified away by investing in both Kinetics Small and Smallcap World 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 World 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 World Fund, you can compare the effects of market volatilities on Kinetics Small and Smallcap World 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 World. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kinetics Small and Smallcap World.
Diversification Opportunities for Kinetics Small and Smallcap World
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Kinetics and Smallcap is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Kinetics Small Cap and Smallcap World Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Smallcap World 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 World. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Smallcap World has no effect on the direction of Kinetics Small i.e., Kinetics Small and Smallcap World go up and down completely randomly.
Pair Corralation between Kinetics Small and Smallcap World
Assuming the 90 days horizon Kinetics Small Cap is expected to generate 1.75 times more return on investment than Smallcap World. However, Kinetics Small is 1.75 times more volatile than Smallcap World Fund. It trades about 0.43 of its potential returns per unit of risk. Smallcap World Fund is currently generating about 0.13 per unit of risk. If you would invest 18,198 in Kinetics Small Cap on October 25, 2024 and sell it today you would earn a total of 2,272 from holding Kinetics Small Cap or generate 12.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kinetics Small Cap vs. Smallcap World Fund
Performance |
| Timeline |
| Kinetics Small Cap |
| Smallcap World |
Kinetics Small and Smallcap World Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kinetics Small and Smallcap World
The main advantage of trading using opposite Kinetics Small and Smallcap World positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kinetics Small position performs unexpectedly, Smallcap World 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 World will offset losses from the drop in Smallcap World's long position.| Kinetics Small vs. Barings Global Floating | Kinetics Small vs. Kinetics Global Fund | Kinetics Small vs. Dws Global Macro | Kinetics Small vs. Aqr Global Macro |
| Smallcap World vs. Schwab Government Money | Smallcap World vs. Dreyfus Government Cash | Smallcap World vs. Franklin Adjustable Government | Smallcap World vs. Payden Government 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 Stocks Directory module to find actively traded stocks across global markets.
Other Complementary Tools
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios |