Correlation Between Scout Small and Kinetics Small
Can any of the company-specific risk be diversified away by investing in both Scout 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 Scout 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 Scout Small Cap and Kinetics Small Cap, you can compare the effects of market volatilities on Scout 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 Scout Small with a short position of Kinetics Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Scout Small and Kinetics Small.
Diversification Opportunities for Scout Small and Kinetics Small
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Scout and Kinetics is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Scout 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 Scout 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 Scout 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 Scout Small i.e., Scout Small and Kinetics Small go up and down completely randomly.
Pair Corralation between Scout Small and Kinetics Small
Assuming the 90 days horizon Scout Small is expected to generate 1.62 times less return on investment than Kinetics Small. But when comparing it to its historical volatility, Scout Small Cap is 1.27 times less risky than Kinetics Small. It trades about 0.08 of its potential returns per unit of risk. Kinetics Small Cap is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 11,762 in Kinetics Small Cap on September 12, 2024 and sell it today you would earn a total of 8,144 from holding Kinetics Small Cap or generate 69.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Scout Small Cap vs. Kinetics Small Cap
Performance |
| Timeline |
| Scout Small Cap |
| Kinetics Small Cap |
Scout Small and Kinetics Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Scout Small and Kinetics Small
The main advantage of trading using opposite Scout Small and Kinetics Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Scout 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.| Scout Small vs. Red Oak Technology | Scout Small vs. Biotechnology Ultrasector Profund | Scout Small vs. Icon Information Technology | Scout Small vs. Janus Global Technology |
| 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
Other Complementary Tools
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios |