Correlation Between Sp Smallcap and Kinetics Small
Can any of the company-specific risk be diversified away by investing in both Sp Smallcap 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 Sp Smallcap and Kinetics Small into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sp Smallcap 600 and Kinetics Small Cap, you can compare the effects of market volatilities on Sp Smallcap 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 Sp Smallcap with a short position of Kinetics Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sp Smallcap and Kinetics Small.
Diversification Opportunities for Sp Smallcap and Kinetics Small
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between RYSVX and Kinetics is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Sp Smallcap 600 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 Sp Smallcap 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 Sp Smallcap 600 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 Sp Smallcap i.e., Sp Smallcap and Kinetics Small go up and down completely randomly.
Pair Corralation between Sp Smallcap and Kinetics Small
Assuming the 90 days horizon Sp Smallcap is expected to generate 1.11 times less return on investment than Kinetics Small. But when comparing it to its historical volatility, Sp Smallcap 600 is 1.02 times less risky than Kinetics Small. It trades about 0.05 of its potential returns per unit of risk. Kinetics Small Cap is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 13,549 in Kinetics Small Cap on September 14, 2024 and sell it today you would earn a total of 5,429 from holding Kinetics Small Cap or generate 40.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sp Smallcap 600 vs. Kinetics Small Cap
Performance |
| Timeline |
| Sp Smallcap 600 |
| Kinetics Small Cap |
Sp Smallcap and Kinetics Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sp Smallcap and Kinetics Small
The main advantage of trading using opposite Sp Smallcap and Kinetics Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sp Smallcap 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.| Sp Smallcap vs. Columbia Moderate Growth | Sp Smallcap vs. Blackrock Moderate Prepared | Sp Smallcap vs. Jp Morgan Smartretirement | Sp Smallcap vs. Deutsche Multi Asset Moderate |
| Kinetics Small vs. Allianzgi Technology Fund | Kinetics Small vs. Dreyfus Technology Growth | Kinetics Small vs. Pgim Jennison Technology | Kinetics Small vs. Mfs Technology Fund |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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