Correlation Between Kensington Managed and Qs Growth

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

By analyzing existing cross correlation between Kensington Managed Income and Qs Growth Fund, you can compare the effects of market volatilities on Kensington Managed and Qs Growth 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 Managed with a short position of Qs Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kensington Managed and Qs Growth.

Diversification Opportunities for Kensington Managed and Qs Growth

0.73

Correlation Coefficient

Kensington Managed  Qs Growth

Poor diversification

The 3 months correlation between Kensington and LANIX is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Kensington Managed Income and Qs Growth Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Qs Growth Fund and Kensington Managed 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 Managed Income are associated (or correlated) with Qs Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Qs Growth Fund has no effect on the direction of Kensington Managed i.e., Kensington Managed and Qs Growth go up and down completely randomly.

Pair Corralation between Kensington Managed and Qs Growth

Assuming the 90 days horizon Kensington Managed is expected to generate 4.61 times less return on investment than Qs Growth. But when comparing it to its historical volatility, Kensington Managed Income is 3.52 times less risky than Qs Growth. It trades about 0.29 of its potential returns per unit of risk. Qs Growth Fund is currently generating about 0.37 of returns per unit of risk over similar time horizon. If you would invest  1,801  in Qs Growth Fund on September 4, 2024 and sell it today you would earn a total of  91.00  from holding Qs Growth Fund or generate 5.05% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.24%
Values	Daily Returns

Kensington Managed Income  vs.  Qs Growth Fund

Kensington Managed Income

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Kensington Managed Income are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Kensington Managed is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Qs Growth Fund

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Qs Growth Fund are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Qs Growth may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Kensington Managed and Qs Growth

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

The idea behind Kensington Managed Income and Qs Growth Fund 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.