Correlation Between Growth Opportunities and Kinetics Small
Can any of the company-specific risk be diversified away by investing in both Growth Opportunities 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 Growth Opportunities and Kinetics Small into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Growth Opportunities Fund and Kinetics Small Cap, you can compare the effects of market volatilities on Growth Opportunities 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 Growth Opportunities with a short position of Kinetics Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Growth Opportunities and Kinetics Small.
Diversification Opportunities for Growth Opportunities and Kinetics Small
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between GROWTH and Kinetics is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Growth Opportunities Fund 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 Growth Opportunities 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 Growth Opportunities Fund 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 Growth Opportunities i.e., Growth Opportunities and Kinetics Small go up and down completely randomly.
Pair Corralation between Growth Opportunities and Kinetics Small
Assuming the 90 days horizon Growth Opportunities is expected to generate 1.77 times less return on investment than Kinetics Small. But when comparing it to its historical volatility, Growth Opportunities Fund is 1.51 times less risky than Kinetics Small. It trades about 0.12 of its potential returns per unit of risk. Kinetics Small Cap is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 10,219 in Kinetics Small Cap on August 31, 2024 and sell it today you would earn a total of 12,932 from holding Kinetics Small Cap or generate 126.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Growth Opportunities Fund vs. Kinetics Small Cap
Performance |
| Timeline |
| Growth Opportunities |
| Kinetics Small Cap |
Growth Opportunities and Kinetics Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Growth Opportunities and Kinetics Small
The main advantage of trading using opposite Growth Opportunities and Kinetics Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Growth Opportunities 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.| Growth Opportunities vs. Europacific Growth Fund | Growth Opportunities vs. Washington Mutual Investors | Growth Opportunities vs. Capital World Growth | Growth Opportunities vs. HUMANA INC |
| Kinetics Small vs. Abr 7525 Volatility | Kinetics Small vs. T Rowe Price | Kinetics Small vs. Rbb Fund | Kinetics Small vs. Iaadx |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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