Correlation Between SCOR PK and Kinetics Market
Can any of the company-specific risk be diversified away by investing in both SCOR PK and Kinetics Market 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 SCOR PK and Kinetics Market into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SCOR PK and Kinetics Market Opportunities, you can compare the effects of market volatilities on SCOR PK and Kinetics Market 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 SCOR PK with a short position of Kinetics Market. Check out your portfolio center. Please also check ongoing floating volatility patterns of SCOR PK and Kinetics Market.
Diversification Opportunities for SCOR PK and Kinetics Market
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between SCOR and Kinetics is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding SCOR PK and Kinetics Market Opportunities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kinetics Market Oppo and SCOR PK 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 SCOR PK are associated (or correlated) with Kinetics Market. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kinetics Market Oppo has no effect on the direction of SCOR PK i.e., SCOR PK and Kinetics Market go up and down completely randomly.
Pair Corralation between SCOR PK and Kinetics Market
Assuming the 90 days horizon SCOR PK is expected to generate 1.68 times less return on investment than Kinetics Market. But when comparing it to its historical volatility, SCOR PK is 1.13 times less risky than Kinetics Market. It trades about 0.11 of its potential returns per unit of risk. Kinetics Market Opportunities is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 6,479 in Kinetics Market Opportunities on September 13, 2024 and sell it today you would earn a total of 1,197 from holding Kinetics Market Opportunities or generate 18.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SCOR PK vs. Kinetics Market Opportunities
Performance |
| Timeline |
| SCOR PK |
| Kinetics Market Oppo |
SCOR PK and Kinetics Market Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SCOR PK and Kinetics Market
The main advantage of trading using opposite SCOR PK and Kinetics Market positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SCOR PK position performs unexpectedly, Kinetics Market 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 Market will offset losses from the drop in Kinetics Market's long position.The idea behind SCOR PK and Kinetics Market Opportunities pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Kinetics Market vs. Blackrock Science Technology | Kinetics Market vs. Biotechnology Ultrasector Profund | Kinetics Market vs. Pgim Jennison Technology | Kinetics Market vs. Technology Ultrasector Profund |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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