Correlation Between Ab Small and Kinetics Small
Can any of the company-specific risk be diversified away by investing in both Ab Small and Kinetics Small 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 Ab Small and Kinetics Small into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ab Small Cap and Kinetics Small Cap, you can compare the effects of market volatilities on Ab Small and Kinetics Small 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 Ab Small with a short position of Kinetics Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ab Small and Kinetics Small.
Diversification Opportunities for Ab Small and Kinetics Small
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between QUAKX and Kinetics is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Ab Small Cap and Kinetics Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kinetics Small Cap and Ab 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 Ab Small Cap are associated (or correlated) with Kinetics Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kinetics Small Cap has no effect on the direction of Ab Small i.e., Ab Small and Kinetics Small go up and down completely randomly.
Pair Corralation between Ab Small and Kinetics Small
Assuming the 90 days horizon Ab Small is expected to generate 1.35 times less return on investment than Kinetics Small. But when comparing it to its historical volatility, Ab Small Cap is 1.15 times less risky than Kinetics Small. It trades about 0.07 of its potential returns per unit of risk. Kinetics Small Cap is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 13,447 in Kinetics Small Cap on August 28, 2024 and sell it today you would earn a total of 9,429 from holding Kinetics Small Cap or generate 70.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ab Small Cap vs. Kinetics Small Cap
Performance |
| Timeline |
| Ab Small Cap |
| Kinetics Small Cap |
Ab Small and Kinetics Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ab Small and Kinetics Small
The main advantage of trading using opposite Ab Small and Kinetics Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ab Small position performs unexpectedly, Kinetics Small 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 Kinetics Small will offset losses from the drop in Kinetics Small's long position.| Ab Small vs. Ab Large Cap | Ab Small vs. Ab Small Cap | Ab Small vs. Ab Small Cap | Ab Small vs. Ab Small Cap |
| Kinetics Small vs. Qs Large Cap | Kinetics Small vs. Morgan Stanley Institutional | Kinetics Small vs. Ab E Opportunities | Kinetics Small vs. T Rowe Price |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
Other Complementary Tools
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios |