Correlation Between Vanguard Explorer and Kinetics Small
Can any of the company-specific risk be diversified away by investing in both Vanguard Explorer 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 Vanguard Explorer and Kinetics Small into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Explorer Fund and Kinetics Small Cap, you can compare the effects of market volatilities on Vanguard Explorer 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 Vanguard Explorer with a short position of Kinetics Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Explorer and Kinetics Small.
Diversification Opportunities for Vanguard Explorer and Kinetics Small
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Vanguard and Kinetics is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Explorer 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 Vanguard Explorer 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 Vanguard Explorer 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 Vanguard Explorer i.e., Vanguard Explorer and Kinetics Small go up and down completely randomly.
Pair Corralation between Vanguard Explorer and Kinetics Small
Assuming the 90 days horizon Vanguard Explorer Fund is expected to under-perform the Kinetics Small. But the mutual fund apears to be less risky and, when comparing its historical volatility, Vanguard Explorer Fund is 1.24 times less risky than Kinetics Small. The mutual fund trades about -0.28 of its potential returns per unit of risk. The Kinetics Small Cap is currently generating about -0.16 of returns per unit of risk over similar time horizon. If you would invest 18,788 in Kinetics Small Cap on October 9, 2024 and sell it today you would lose (1,400) from holding Kinetics Small Cap or give up 7.45% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Explorer Fund vs. Kinetics Small Cap
Performance |
| Timeline |
| Vanguard Explorer |
| Kinetics Small Cap |
Vanguard Explorer and Kinetics Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Explorer and Kinetics Small
The main advantage of trading using opposite Vanguard Explorer and Kinetics Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Explorer 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.| Vanguard Explorer vs. Vanguard International Growth | Vanguard Explorer vs. Vanguard Windsor Ii | Vanguard Explorer vs. Vanguard Primecap Fund | Vanguard Explorer vs. Vanguard Growth Fund |
| Kinetics Small vs. Kinetics Global Fund | Kinetics Small vs. Kinetics Global Fund | Kinetics Small vs. Kinetics Paradigm Fund | Kinetics Small vs. Kinetics Internet Fund |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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