Correlation Between Enhanced and Kinetics Small

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

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

Diversification Opportunities for Enhanced and Kinetics Small

0.78

Correlation Coefficient

Enhanced  Kinetics Small

Poor diversification

The 3 months correlation between Enhanced and Kinetics is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Enhanced Large Pany 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 Enhanced 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 Enhanced Large Pany 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 Enhanced i.e., Enhanced and Kinetics Small go up and down completely randomly.

Pair Corralation between Enhanced and Kinetics Small

Assuming the 90 days horizon Enhanced Large Pany is expected to generate 0.53 times more return on investment than Kinetics Small. However, Enhanced Large Pany is 1.88 times less risky than Kinetics Small. It trades about 0.1 of its potential returns per unit of risk. Kinetics Small Cap is currently generating about 0.05 per unit of risk. If you would invest  1,012  in Enhanced Large Pany on October 4, 2024 and sell it today you would earn a total of  482.00  from holding Enhanced Large Pany or generate 47.63% return on investment over 90 days.

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

Enhanced Large Pany  vs.  Kinetics Small Cap

Enhanced Large Pany

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Enhanced Large Pany are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong essential indicators, Enhanced 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 Enhanced and Kinetics Small

The main advantage of trading using opposite Enhanced and Kinetics Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Enhanced 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 Enhanced Large Pany 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.