Correlation Between Kinetics Small and Government Securities
Can any of the company-specific risk be diversified away by investing in both Kinetics Small and Government Securities 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 Government Securities 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 Government Securities Fund, you can compare the effects of market volatilities on Kinetics Small and Government Securities 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 Government Securities. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kinetics Small and Government Securities.
Diversification Opportunities for Kinetics Small and Government Securities
-0.77 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Kinetics and Government is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Kinetics Small Cap and Government Securities Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 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 Government Securities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Government Securities has no effect on the direction of Kinetics Small i.e., Kinetics Small and Government Securities go up and down completely randomly.
Pair Corralation between Kinetics Small and Government Securities
Assuming the 90 days horizon Kinetics Small Cap is expected to generate 3.48 times more return on investment than Government Securities. However, Kinetics Small is 3.48 times more volatile than Government Securities Fund. It trades about 0.18 of its potential returns per unit of risk. Government Securities Fund is currently generating about 0.05 per unit of risk. If you would invest 10,988 in Kinetics Small Cap on September 4, 2024 and sell it today you would earn a total of 10,890 from holding Kinetics Small Cap or generate 99.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.6% |
| Values | Daily Returns |
Kinetics Small Cap vs. Government Securities Fund
Performance |
| Timeline |
| Kinetics Small Cap |
| Government Securities |
Kinetics Small and Government Securities Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kinetics Small and Government Securities
The main advantage of trading using opposite Kinetics Small and Government Securities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kinetics Small position performs unexpectedly, Government Securities 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 Government Securities will offset losses from the drop in Government Securities' long position.| Kinetics Small vs. Touchstone Small Cap | Kinetics Small vs. Small Pany Growth | Kinetics Small vs. Rbc Small Cap | Kinetics Small vs. Templeton Global Smaller |
| Government Securities vs. Amg River Road | Government Securities vs. Royce Opportunity Fund | Government Securities vs. Victory Rs Partners | Government Securities vs. Ultrasmall Cap Profund Ultrasmall 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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