Correlation Between Kinetics Small and Vanguard Small-cap
Can any of the company-specific risk be diversified away by investing in both Kinetics Small and Vanguard Small-cap 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 Vanguard Small-cap 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 Vanguard Small Cap Index, you can compare the effects of market volatilities on Kinetics Small and Vanguard Small-cap 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 Vanguard Small-cap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kinetics Small and Vanguard Small-cap.
Diversification Opportunities for Kinetics Small and Vanguard Small-cap
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Kinetics and VANGUARD is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Kinetics Small Cap and Vanguard Small Cap Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Small Cap 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 Vanguard Small-cap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Small Cap has no effect on the direction of Kinetics Small i.e., Kinetics Small and Vanguard Small-cap go up and down completely randomly.
Pair Corralation between Kinetics Small and Vanguard Small-cap
Assuming the 90 days horizon Kinetics Small Cap is expected to generate 2.16 times more return on investment than Vanguard Small-cap. However, Kinetics Small is 2.16 times more volatile than Vanguard Small Cap Index. It trades about 0.46 of its potential returns per unit of risk. Vanguard Small Cap Index is currently generating about 0.29 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 | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kinetics Small Cap vs. Vanguard Small Cap Index
Performance |
| Timeline |
| Kinetics Small Cap |
| Vanguard Small Cap |
Kinetics Small and Vanguard Small-cap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kinetics Small and Vanguard Small-cap
The main advantage of trading using opposite Kinetics Small and Vanguard Small-cap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kinetics Small position performs unexpectedly, Vanguard Small-cap 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 Vanguard Small-cap will offset losses from the drop in Vanguard Small-cap's long position.| Kinetics Small vs. Qs Large Cap | Kinetics Small vs. Morgan Stanley Institutional | Kinetics Small vs. Ab E Opportunities | Kinetics Small vs. T Rowe Price |
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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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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