Correlation Between Calvert Moderate and Kinetics Small

Can any of the company-specific risk be diversified away by investing in both Calvert Moderate 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 Calvert Moderate and Kinetics Small into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Calvert Moderate Allocation and Kinetics Small Cap, you can compare the effects of market volatilities on Calvert Moderate 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 Calvert Moderate with a short position of Kinetics Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Calvert Moderate and Kinetics Small.

Diversification Opportunities for Calvert Moderate and Kinetics Small

0.41

Correlation Coefficient

Calvert Moderate  Kinetics Small

Very weak diversification

The 3 months correlation between Calvert and Kinetics is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Calvert Moderate Allocation 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 Calvert Moderate 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 Calvert Moderate Allocation 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 Calvert Moderate i.e., Calvert Moderate and Kinetics Small go up and down completely randomly.

Pair Corralation between Calvert Moderate and Kinetics Small

Assuming the 90 days horizon Calvert Moderate is expected to generate 3.66 times less return on investment than Kinetics Small. But when comparing it to its historical volatility, Calvert Moderate Allocation is 2.74 times less risky than Kinetics Small. It trades about 0.04 of its potential returns per unit of risk. Kinetics Small Cap is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  12,653  in Kinetics Small Cap on October 4, 2024 and sell it today you would earn a total of  4,745  from holding Kinetics Small Cap or generate 37.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Calvert Moderate Allocation  vs.  Kinetics Small Cap

Calvert Moderate All

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Calvert Moderate Allocation has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental indicators, Calvert Moderate is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Kinetics Small Cap

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Kinetics Small Cap are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Kinetics Small may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Calvert Moderate and Kinetics Small

The main advantage of trading using opposite Calvert Moderate and Kinetics Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Calvert Moderate 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.

The idea behind Calvert Moderate Allocation and Kinetics Small Cap pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.