Correlation Between Kinetics Small and Western Asset
Can any of the company-specific risk be diversified away by investing in both Kinetics Small and Western Asset 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 Western Asset 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 Western Asset E, you can compare the effects of market volatilities on Kinetics Small and Western Asset 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 Western Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kinetics Small and Western Asset.
Diversification Opportunities for Kinetics Small and Western Asset
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between Kinetics and Western is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Kinetics Small Cap and Western Asset E in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Asset E 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 Western Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Asset E has no effect on the direction of Kinetics Small i.e., Kinetics Small and Western Asset go up and down completely randomly.
Pair Corralation between Kinetics Small and Western Asset
Assuming the 90 days horizon Kinetics Small Cap is expected to generate 4.56 times more return on investment than Western Asset. However, Kinetics Small is 4.56 times more volatile than Western Asset E. It trades about 0.43 of its potential returns per unit of risk. Western Asset E is currently generating about 0.08 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 | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kinetics Small Cap vs. Western Asset E
Performance |
| Timeline |
| Kinetics Small Cap |
| Western Asset E |
Kinetics Small and Western Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kinetics Small and Western Asset
The main advantage of trading using opposite Kinetics Small and Western Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kinetics Small position performs unexpectedly, Western Asset 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 Western Asset will offset losses from the drop in Western Asset'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 |
| Western Asset vs. T Rowe Price | Western Asset vs. Multisector Bond Sma | Western Asset vs. Intermediate Term Tax Free Bond | Western Asset vs. California Municipal Portfolio |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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