Correlation Between Kinetics Small and Barrow Hanley
Can any of the company-specific risk be diversified away by investing in both Kinetics Small and Barrow Hanley 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 Barrow Hanley 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 Barrow Hanley Floating, you can compare the effects of market volatilities on Kinetics Small and Barrow Hanley 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 Barrow Hanley. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kinetics Small and Barrow Hanley.
Diversification Opportunities for Kinetics Small and Barrow Hanley
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Kinetics and Barrow is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Kinetics Small Cap and Barrow Hanley Floating in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Barrow Hanley Floating 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 Barrow Hanley. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Barrow Hanley Floating has no effect on the direction of Kinetics Small i.e., Kinetics Small and Barrow Hanley go up and down completely randomly.
Pair Corralation between Kinetics Small and Barrow Hanley
Assuming the 90 days horizon Kinetics Small Cap is expected to under-perform the Barrow Hanley. In addition to that, Kinetics Small is 6.82 times more volatile than Barrow Hanley Floating. It trades about -0.05 of its total potential returns per unit of risk. Barrow Hanley Floating is currently generating about -0.14 per unit of volatility. If you would invest 992.00 in Barrow Hanley Floating on September 12, 2024 and sell it today you would lose (15.00) from holding Barrow Hanley Floating or give up 1.51% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kinetics Small Cap vs. Barrow Hanley Floating
Performance |
| Timeline |
| Kinetics Small Cap |
| Barrow Hanley Floating |
Kinetics Small and Barrow Hanley Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kinetics Small and Barrow Hanley
The main advantage of trading using opposite Kinetics Small and Barrow Hanley positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kinetics Small position performs unexpectedly, Barrow Hanley 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 Barrow Hanley will offset losses from the drop in Barrow Hanley's long position.| Kinetics Small vs. Needham Aggressive Growth | Kinetics Small vs. Ultramid Cap Profund Ultramid Cap | Kinetics Small vs. HUMANA INC | Kinetics Small vs. Barloworld Ltd ADR |
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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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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