Correlation Between Kensington Active and Riskproreg Dynamic

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

By analyzing existing cross correlation between Kensington Active Advantage and Riskproreg Dynamic 20 30, you can compare the effects of market volatilities on Kensington Active and Riskproreg Dynamic 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 Kensington Active with a short position of Riskproreg Dynamic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kensington Active and Riskproreg Dynamic.

Diversification Opportunities for Kensington Active and Riskproreg Dynamic

0.76

Correlation Coefficient

Kensington Active  Riskproreg Dynamic

Poor diversification

The 3 months correlation between Kensington and Riskproreg is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Kensington Active Advantage and Riskproreg Dynamic 20 30 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Riskproreg Dynamic and Kensington Active 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 Kensington Active Advantage are associated (or correlated) with Riskproreg Dynamic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Riskproreg Dynamic has no effect on the direction of Kensington Active i.e., Kensington Active and Riskproreg Dynamic go up and down completely randomly.

Pair Corralation between Kensington Active and Riskproreg Dynamic

Assuming the 90 days horizon Kensington Active Advantage is expected to generate 0.91 times more return on investment than Riskproreg Dynamic. However, Kensington Active Advantage is 1.1 times less risky than Riskproreg Dynamic. It trades about 0.06 of its potential returns per unit of risk. Riskproreg Dynamic 20 30 is currently generating about -0.04 per unit of risk. If you would invest  998.00  in Kensington Active Advantage on September 22, 2024 and sell it today you would earn a total of  15.00  from holding Kensington Active Advantage or generate 1.5% return on investment over 90 days.

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

Kensington Active Advantage  vs.  Riskproreg Dynamic 20 30

Kensington Active

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Kensington Active Advantage are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Kensington Active is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Riskproreg Dynamic

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Riskproreg Dynamic 20 30 has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental indicators, Riskproreg Dynamic is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Kensington Active and Riskproreg Dynamic

The main advantage of trading using opposite Kensington Active and Riskproreg Dynamic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kensington Active position performs unexpectedly, Riskproreg Dynamic 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 Riskproreg Dynamic will offset losses from the drop in Riskproreg Dynamic's long position.

The idea behind Kensington Active Advantage and Riskproreg Dynamic 20 30 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.