Correlation Between Kinetics Small and Stone Ridge
Can any of the company-specific risk be diversified away by investing in both Kinetics Small and Stone Ridge 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 Stone Ridge 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 Stone Ridge Diversified, you can compare the effects of market volatilities on Kinetics Small and Stone Ridge 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 Stone Ridge. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kinetics Small and Stone Ridge.
Diversification Opportunities for Kinetics Small and Stone Ridge
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Kinetics and Stone is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Kinetics Small Cap and Stone Ridge Diversified in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stone Ridge Diversified 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 Stone Ridge. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stone Ridge Diversified has no effect on the direction of Kinetics Small i.e., Kinetics Small and Stone Ridge go up and down completely randomly.
Pair Corralation between Kinetics Small and Stone Ridge
Assuming the 90 days horizon Kinetics Small Cap is expected to generate 14.25 times more return on investment than Stone Ridge. However, Kinetics Small is 14.25 times more volatile than Stone Ridge Diversified. It trades about 0.37 of its potential returns per unit of risk. Stone Ridge Diversified is currently generating about 0.06 per unit of risk. If you would invest 18,487 in Kinetics Small Cap on September 1, 2024 and sell it today you would earn a total of 4,311 from holding Kinetics Small Cap or generate 23.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Kinetics Small Cap vs. Stone Ridge Diversified
Performance |
| Timeline |
| Kinetics Small Cap |
| Stone Ridge Diversified |
Kinetics Small and Stone Ridge Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kinetics Small and Stone Ridge
The main advantage of trading using opposite Kinetics Small and Stone Ridge positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kinetics Small position performs unexpectedly, Stone Ridge 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 Stone Ridge will offset losses from the drop in Stone Ridge's long position.| Kinetics Small vs. Leggmason Partners Institutional | Kinetics Small vs. Scharf Global Opportunity | Kinetics Small vs. Qs Large Cap | Kinetics Small vs. Abr 7525 Volatility |
| Stone Ridge vs. T Rowe Price | Stone Ridge vs. Nationwide Growth Fund | Stone Ridge vs. Ab Small Cap | Stone Ridge vs. Kinetics Small 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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