Correlation Between Kinetics Small and Nuveen Preferred
Can any of the company-specific risk be diversified away by investing in both Kinetics Small and Nuveen Preferred 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 Nuveen Preferred 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 Nuveen Preferred Income, you can compare the effects of market volatilities on Kinetics Small and Nuveen Preferred 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 Nuveen Preferred. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kinetics Small and Nuveen Preferred.
Diversification Opportunities for Kinetics Small and Nuveen Preferred
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Kinetics and Nuveen is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Kinetics Small Cap and Nuveen Preferred Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuveen Preferred Income 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 Nuveen Preferred. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nuveen Preferred Income has no effect on the direction of Kinetics Small i.e., Kinetics Small and Nuveen Preferred go up and down completely randomly.
Pair Corralation between Kinetics Small and Nuveen Preferred
Assuming the 90 days horizon Kinetics Small Cap is expected to generate 3.14 times more return on investment than Nuveen Preferred. However, Kinetics Small is 3.14 times more volatile than Nuveen Preferred Income. It trades about 0.27 of its potential returns per unit of risk. Nuveen Preferred Income is currently generating about 0.19 per unit of risk. If you would invest 10,321 in Kinetics Small Cap on September 3, 2024 and sell it today you would earn a total of 9,560 from holding Kinetics Small Cap or generate 92.63% 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. Nuveen Preferred Income
Performance |
| Timeline |
| Kinetics Small Cap |
| Nuveen Preferred Income |
Kinetics Small and Nuveen Preferred Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kinetics Small and Nuveen Preferred
The main advantage of trading using opposite Kinetics Small and Nuveen Preferred positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kinetics Small position performs unexpectedly, Nuveen Preferred 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 Nuveen Preferred will offset losses from the drop in Nuveen Preferred'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 |
| Nuveen Preferred vs. Blackrock Floating Rate | Nuveen Preferred vs. Flaherty Crumrine Preferred | Nuveen Preferred vs. Western Asset Emerging | Nuveen Preferred vs. Doubleline Income Solutions |
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 Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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