Correlation Between International Equity and Kinetics Small
Can any of the company-specific risk be diversified away by investing in both International Equity 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 International Equity and Kinetics Small into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between International Equity Portfolio and Kinetics Small Cap, you can compare the effects of market volatilities on International Equity 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 International Equity with a short position of Kinetics Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of International Equity and Kinetics Small.
Diversification Opportunities for International Equity and Kinetics Small
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between International and Kinetics is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding International Equity Portfolio 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 International Equity 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 International Equity Portfolio 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 International Equity i.e., International Equity and Kinetics Small go up and down completely randomly.
Pair Corralation between International Equity and Kinetics Small
Assuming the 90 days horizon International Equity is expected to generate 8.05 times less return on investment than Kinetics Small. But when comparing it to its historical volatility, International Equity Portfolio is 2.53 times less risky than Kinetics Small. It trades about 0.16 of its potential returns per unit of risk. Kinetics Small Cap is currently generating about 0.51 of returns per unit of risk over similar time horizon. If you would invest 17,889 in Kinetics Small Cap on October 24, 2024 and sell it today you would earn a total of 2,673 from holding Kinetics Small Cap or generate 14.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 94.74% |
| Values | Daily Returns |
International Equity Portfolio vs. Kinetics Small Cap
Performance |
| Timeline |
| International Equity |
| Kinetics Small Cap |
International Equity and Kinetics Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with International Equity and Kinetics Small
The main advantage of trading using opposite International Equity and Kinetics Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if International Equity 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.| International Equity vs. Angel Oak Ultrashort | International Equity vs. Jhancock Short Duration | International Equity vs. Prudential Short Duration | International Equity vs. Siit Ultra Short |
| Kinetics Small vs. Fidelity Sai Convertible | Kinetics Small vs. Gabelli Convertible And | Kinetics Small vs. Putnam Convertible Securities | Kinetics Small vs. Columbia Convertible Securities |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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