Correlation Between Kinetics Small and 1290 Funds
Can any of the company-specific risk be diversified away by investing in both Kinetics Small and 1290 Funds 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 1290 Funds 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 1290 Funds , you can compare the effects of market volatilities on Kinetics Small and 1290 Funds 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 1290 Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kinetics Small and 1290 Funds.
Diversification Opportunities for Kinetics Small and 1290 Funds
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Kinetics and 1290 is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Kinetics Small Cap and 1290 Funds in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 1290 Funds 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 1290 Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 1290 Funds has no effect on the direction of Kinetics Small i.e., Kinetics Small and 1290 Funds go up and down completely randomly.
Pair Corralation between Kinetics Small and 1290 Funds
Assuming the 90 days horizon Kinetics Small Cap is expected to generate 3.33 times more return on investment than 1290 Funds. However, Kinetics Small is 3.33 times more volatile than 1290 Funds . It trades about 0.4 of its potential returns per unit of risk. 1290 Funds is currently generating about 0.32 per unit of risk. If you would invest 16,134 in Kinetics Small Cap on September 1, 2024 and sell it today you would earn a total of 4,056 from holding Kinetics Small Cap or generate 25.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Kinetics Small Cap vs. 1290 Funds
Performance |
| Timeline |
| Kinetics Small Cap |
| 1290 Funds |
Kinetics Small and 1290 Funds Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kinetics Small and 1290 Funds
The main advantage of trading using opposite Kinetics Small and 1290 Funds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kinetics Small position performs unexpectedly, 1290 Funds 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 1290 Funds will offset losses from the drop in 1290 Funds' long position.| Kinetics Small vs. Kinetics Global Fund | Kinetics Small vs. Kinetics Paradigm Fund | Kinetics Small vs. Kinetics Internet Fund | Kinetics Small vs. Kinetics Global Fund |
| 1290 Funds vs. 1290 Funds | 1290 Funds vs. 1290 Essex Small | 1290 Funds vs. 1290 Funds | 1290 Funds vs. 1290 Smartbeta Equity |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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