Correlation Between Kinetics Small and Investec Global
Can any of the company-specific risk be diversified away by investing in both Kinetics Small and Investec Global 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 Investec Global 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 Investec Global Franchise, you can compare the effects of market volatilities on Kinetics Small and Investec Global 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 Investec Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kinetics Small and Investec Global.
Diversification Opportunities for Kinetics Small and Investec Global
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Kinetics and Investec is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Kinetics Small Cap and Investec Global Franchise in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Investec Global Franchise 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 Investec Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Investec Global Franchise has no effect on the direction of Kinetics Small i.e., Kinetics Small and Investec Global go up and down completely randomly.
Pair Corralation between Kinetics Small and Investec Global
Assuming the 90 days horizon Kinetics Small Cap is expected to under-perform the Investec Global. In addition to that, Kinetics Small is 6.43 times more volatile than Investec Global Franchise. It trades about -0.12 of its total potential returns per unit of risk. Investec Global Franchise is currently generating about 0.25 per unit of volatility. If you would invest 1,770 in Investec Global Franchise on September 13, 2024 and sell it today you would earn a total of 49.00 from holding Investec Global Franchise or generate 2.77% 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. Investec Global Franchise
Performance |
| Timeline |
| Kinetics Small Cap |
| Investec Global Franchise |
Kinetics Small and Investec Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kinetics Small and Investec Global
The main advantage of trading using opposite Kinetics Small and Investec Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kinetics Small position performs unexpectedly, Investec Global 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 Investec Global will offset losses from the drop in Investec Global's long position.| Kinetics Small vs. Royce Opportunity Fund | Kinetics Small vs. Victory Rs Partners | Kinetics Small vs. Applied Finance Explorer | Kinetics Small vs. Fidelity Small Cap |
| Investec Global vs. Investec Emerging Markets | Investec Global vs. Investec Global Franchise | Investec Global vs. Ninety One International | Investec Global vs. Vanguard 500 Index |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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