Correlation Between State Street and Kinetics Small
Can any of the company-specific risk be diversified away by investing in both State Street 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 State Street and Kinetics Small into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between State Street Target and Kinetics Small Cap, you can compare the effects of market volatilities on State Street 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 State Street with a short position of Kinetics Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of State Street and Kinetics Small.
Diversification Opportunities for State Street and Kinetics Small
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between State and Kinetics is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding State Street Target 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 State Street 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 State Street Target 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 State Street i.e., State Street and Kinetics Small go up and down completely randomly.
Pair Corralation between State Street and Kinetics Small
Assuming the 90 days horizon State Street Target is expected to generate 0.35 times more return on investment than Kinetics Small. However, State Street Target is 2.85 times less risky than Kinetics Small. It trades about 0.07 of its potential returns per unit of risk. Kinetics Small Cap is currently generating about 0.01 per unit of risk. If you would invest 1,521 in State Street Target on November 28, 2024 and sell it today you would earn a total of 12.00 from holding State Street Target or generate 0.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
State Street Target vs. Kinetics Small Cap
Performance |
| Timeline |
| State Street Target |
| Kinetics Small Cap |
State Street and Kinetics Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with State Street and Kinetics Small
The main advantage of trading using opposite State Street and Kinetics Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if State Street 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.| State Street vs. John Hancock Variable | State Street vs. Blackrock Health Sciences | State Street vs. Putnam Global Health | State Street vs. Tekla Healthcare Investors |
| Kinetics Small vs. Dreyfusstandish Global Fixed | Kinetics Small vs. Gmo Global Equity | Kinetics Small vs. Rationalrgn Hedged Equity | Kinetics Small vs. Crossmark Steward Equity |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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