Correlation Between Financial Services and Kinetics Market
Can any of the company-specific risk be diversified away by investing in both Financial Services 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 Financial Services and Kinetics Market into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Financial Services Portfolio and Kinetics Market Opportunities, you can compare the effects of market volatilities on Financial Services 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 Financial Services with a short position of Kinetics Market. Check out your portfolio center. Please also check ongoing floating volatility patterns of Financial Services and Kinetics Market.
Diversification Opportunities for Financial Services and Kinetics Market
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Financial and Kinetics is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Financial Services Portfolio 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 Financial Services 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 Financial Services Portfolio 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 Financial Services i.e., Financial Services and Kinetics Market go up and down completely randomly.
Pair Corralation between Financial Services and Kinetics Market
Assuming the 90 days horizon Financial Services Portfolio is expected to under-perform the Kinetics Market. But the mutual fund apears to be less risky and, when comparing its historical volatility, Financial Services Portfolio is 2.29 times less risky than Kinetics Market. The mutual fund trades about -0.2 of its potential returns per unit of risk. The Kinetics Market Opportunities is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 8,045 in Kinetics Market Opportunities on September 12, 2024 and sell it today you would lose (152.00) from holding Kinetics Market Opportunities or give up 1.89% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Financial Services Portfolio vs. Kinetics Market Opportunities
Performance |
| Timeline |
| Financial Services |
| Kinetics Market Oppo |
Financial Services and Kinetics Market Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Financial Services and Kinetics Market
The main advantage of trading using opposite Financial Services and Kinetics Market positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Financial Services 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.| Financial Services vs. Vanguard Financials Index | Financial Services vs. Regional Bank Fund | Financial Services vs. Regional Bank Fund | Financial Services vs. T Rowe Price |
| Kinetics Market vs. T Rowe Price | Kinetics Market vs. T Rowe Price | Kinetics Market vs. SCOR PK | Kinetics Market vs. Morningstar Unconstrained Allocation |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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