Correlation Between Spectrum Advisors and Kensington Managed
Can any of the company-specific risk be diversified away by investing in both Spectrum Advisors and Kensington Managed 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 Spectrum Advisors and Kensington Managed into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Spectrum Advisors Preferred and Kensington Managed Income, you can compare the effects of market volatilities on Spectrum Advisors and Kensington Managed 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 Spectrum Advisors with a short position of Kensington Managed. Check out your portfolio center. Please also check ongoing floating volatility patterns of Spectrum Advisors and Kensington Managed.
Diversification Opportunities for Spectrum Advisors and Kensington Managed
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Spectrum and Kensington is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Spectrum Advisors Preferred and Kensington Managed Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kensington Managed Income and Spectrum Advisors 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 Spectrum Advisors Preferred are associated (or correlated) with Kensington Managed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kensington Managed Income has no effect on the direction of Spectrum Advisors i.e., Spectrum Advisors and Kensington Managed go up and down completely randomly.
Pair Corralation between Spectrum Advisors and Kensington Managed
Assuming the 90 days horizon Spectrum Advisors Preferred is expected to generate 3.54 times more return on investment than Kensington Managed. However, Spectrum Advisors is 3.54 times more volatile than Kensington Managed Income. It trades about 0.06 of its potential returns per unit of risk. Kensington Managed Income is currently generating about 0.08 per unit of risk. If you would invest 1,521 in Spectrum Advisors Preferred on September 14, 2024 and sell it today you would earn a total of 346.00 from holding Spectrum Advisors Preferred or generate 22.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Spectrum Advisors Preferred vs. Kensington Managed Income
Performance |
| Timeline |
| Spectrum Advisors |
| Kensington Managed Income |
Spectrum Advisors and Kensington Managed Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Spectrum Advisors and Kensington Managed
The main advantage of trading using opposite Spectrum Advisors and Kensington Managed positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Spectrum Advisors position performs unexpectedly, Kensington Managed 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 Managed will offset losses from the drop in Kensington Managed's long position.| Spectrum Advisors vs. Lord Abbett Health | Spectrum Advisors vs. Eventide Healthcare Life | Spectrum Advisors vs. Baron Health Care | Spectrum Advisors vs. Invesco Global Health |
| Kensington Managed vs. Spectrum Advisors Preferred | Kensington Managed vs. Ontrack E Fund | Kensington Managed vs. Ontrack E Fund | Kensington Managed vs. Spectrum Unconstrained |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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