Correlation Between Touchstone Small and Kinetics Small
Can any of the company-specific risk be diversified away by investing in both Touchstone Small 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 Touchstone Small and Kinetics Small into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Touchstone Small Cap and Kinetics Small Cap, you can compare the effects of market volatilities on Touchstone Small 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 Touchstone Small with a short position of Kinetics Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Touchstone Small and Kinetics Small.
Diversification Opportunities for Touchstone Small and Kinetics Small
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Touchstone and Kinetics is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Touchstone Small Cap 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 Touchstone Small 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 Touchstone Small Cap 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 Touchstone Small i.e., Touchstone Small and Kinetics Small go up and down completely randomly.
Pair Corralation between Touchstone Small and Kinetics Small
Assuming the 90 days horizon Touchstone Small is expected to generate 3.39 times less return on investment than Kinetics Small. But when comparing it to its historical volatility, Touchstone Small Cap is 2.08 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 0.26 of returns per unit of risk over similar time horizon. If you would invest 17,398 in Kinetics Small Cap on November 1, 2024 and sell it today you would earn a total of 1,624 from holding Kinetics Small Cap or generate 9.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Touchstone Small Cap vs. Kinetics Small Cap
Performance |
| Timeline |
| Touchstone Small Cap |
| Kinetics Small Cap |
Touchstone Small and Kinetics Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Touchstone Small and Kinetics Small
The main advantage of trading using opposite Touchstone Small and Kinetics Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Touchstone Small 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.| Touchstone Small vs. Touchstone Sands Capital | Touchstone Small vs. Mid Cap Growth | Touchstone Small vs. Mid Cap Growth | Touchstone Small vs. Mid Cap Growth |
| Kinetics Small vs. Alpine Ultra Short | Kinetics Small vs. Angel Oak Ultrashort | Kinetics Small vs. Touchstone Ultra Short | Kinetics Small vs. Blackrock Global Longshort |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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