Correlation Between Kinetics Small and Aberdeen Income
Can any of the company-specific risk be diversified away by investing in both Kinetics Small and Aberdeen Income 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 Aberdeen Income 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 Aberdeen Income Credit, you can compare the effects of market volatilities on Kinetics Small and Aberdeen Income 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 Aberdeen Income. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kinetics Small and Aberdeen Income.
Diversification Opportunities for Kinetics Small and Aberdeen Income
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Kinetics and Aberdeen is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Kinetics Small Cap and Aberdeen Income Credit in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aberdeen Income Credit 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 Aberdeen Income. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aberdeen Income Credit has no effect on the direction of Kinetics Small i.e., Kinetics Small and Aberdeen Income go up and down completely randomly.
Pair Corralation between Kinetics Small and Aberdeen Income
Assuming the 90 days horizon Kinetics Small Cap is expected to generate 3.29 times more return on investment than Aberdeen Income. However, Kinetics Small is 3.29 times more volatile than Aberdeen Income Credit. It trades about 0.38 of its potential returns per unit of risk. Aberdeen Income Credit is currently generating about 0.14 per unit of risk. If you would invest 12,674 in Kinetics Small Cap on September 3, 2024 and sell it today you would earn a total of 7,207 from holding Kinetics Small Cap or generate 56.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kinetics Small Cap vs. Aberdeen Income Credit
Performance |
| Timeline |
| Kinetics Small Cap |
| Aberdeen Income Credit |
Kinetics Small and Aberdeen Income Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kinetics Small and Aberdeen Income
The main advantage of trading using opposite Kinetics Small and Aberdeen Income positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kinetics Small position performs unexpectedly, Aberdeen Income 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 Aberdeen Income will offset losses from the drop in Aberdeen Income's long position.| Kinetics Small vs. Virtus Seix Government | Kinetics Small vs. Us Government Securities | Kinetics Small vs. Ab Government Exchange | Kinetics Small vs. Prudential Government Income |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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