Correlation Between All Asset and Kensington Dynamic
Can any of the company-specific risk be diversified away by investing in both All Asset and Kensington Dynamic 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 All Asset and Kensington Dynamic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between All Asset Fund and Kensington Dynamic Growth, you can compare the effects of market volatilities on All Asset and Kensington Dynamic 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 All Asset with a short position of Kensington Dynamic. Check out your portfolio center. Please also check ongoing floating volatility patterns of All Asset and Kensington Dynamic.
Diversification Opportunities for All Asset and Kensington Dynamic
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between All and Kensington is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding All Asset Fund and Kensington Dynamic Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kensington Dynamic Growth and All Asset 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 All Asset Fund are associated (or correlated) with Kensington Dynamic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kensington Dynamic Growth has no effect on the direction of All Asset i.e., All Asset and Kensington Dynamic go up and down completely randomly.
Pair Corralation between All Asset and Kensington Dynamic
Assuming the 90 days horizon All Asset is expected to generate 1.78 times less return on investment than Kensington Dynamic. But when comparing it to its historical volatility, All Asset Fund is 2.35 times less risky than Kensington Dynamic. It trades about 0.19 of its potential returns per unit of risk. Kensington Dynamic Growth is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 1,083 in Kensington Dynamic Growth on August 31, 2024 and sell it today you would earn a total of 34.00 from holding Kensington Dynamic Growth or generate 3.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
All Asset Fund vs. Kensington Dynamic Growth
Performance |
| Timeline |
| All Asset Fund |
| Kensington Dynamic Growth |
All Asset and Kensington Dynamic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with All Asset and Kensington Dynamic
The main advantage of trading using opposite All Asset and Kensington Dynamic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if All Asset position performs unexpectedly, Kensington Dynamic 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 Kensington Dynamic will offset losses from the drop in Kensington Dynamic's long position.| All Asset vs. All Asset Fund | All Asset vs. Pimco All Asset | All Asset vs. All Asset Fund | All Asset vs. Pimco All Asset |
| Kensington Dynamic vs. Vanguard Small Cap Growth | Kensington Dynamic vs. Fisher Small Cap | Kensington Dynamic vs. Small Pany Growth | Kensington Dynamic vs. Victory Rs Small |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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