Correlation Between Transamerica High and Kinetics Small
Can any of the company-specific risk be diversified away by investing in both Transamerica High 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 Transamerica High and Kinetics Small into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Transamerica High Yield and Kinetics Small Cap, you can compare the effects of market volatilities on Transamerica High 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 Transamerica High with a short position of Kinetics Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Transamerica High and Kinetics Small.
Diversification Opportunities for Transamerica High and Kinetics Small
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Transamerica and Kinetics is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Transamerica High Yield 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 Transamerica High 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 Transamerica High Yield 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 Transamerica High i.e., Transamerica High and Kinetics Small go up and down completely randomly.
Pair Corralation between Transamerica High and Kinetics Small
Assuming the 90 days horizon Transamerica High is expected to generate 2.67 times less return on investment than Kinetics Small. But when comparing it to its historical volatility, Transamerica High Yield is 4.96 times less risky than Kinetics Small. It trades about 0.11 of its potential returns per unit of risk. Kinetics Small Cap is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 13,448 in Kinetics Small Cap on September 12, 2024 and sell it today you would earn a total of 6,458 from holding Kinetics Small Cap or generate 48.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Transamerica High Yield vs. Kinetics Small Cap
Performance |
| Timeline |
| Transamerica High Yield |
| Kinetics Small Cap |
Transamerica High and Kinetics Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Transamerica High and Kinetics Small
The main advantage of trading using opposite Transamerica High and Kinetics Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Transamerica High 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.| Transamerica High vs. Kinetics Small Cap | Transamerica High vs. Sp Smallcap 600 | Transamerica High vs. Mutual Of America | Transamerica High vs. Lebenthal Lisanti Small |
| Kinetics Small vs. Aqr Small Cap | Kinetics Small vs. Pace Smallmedium Value | Kinetics Small vs. Lebenthal Lisanti Small | Kinetics Small vs. Old Westbury Small |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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