Correlation Between Kap Industrial and CoreShares Income

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

By analyzing existing cross correlation between Kap Industrial Holdings and CoreShares Income AMETF, you can compare the effects of market volatilities on Kap Industrial and CoreShares Income 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 Kap Industrial with a short position of CoreShares Income. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kap Industrial and CoreShares Income.

Diversification Opportunities for Kap Industrial and CoreShares Income

0.44

Correlation Coefficient

Kap Industrial  CoreShares Income

Very weak diversification

The 3 months correlation between Kap and CoreShares is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Kap Industrial Holdings and CoreShares Income AMETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CoreShares Income AMETF and Kap Industrial 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 Kap Industrial Holdings are associated (or correlated) with CoreShares Income. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CoreShares Income AMETF has no effect on the direction of Kap Industrial i.e., Kap Industrial and CoreShares Income go up and down completely randomly.

Pair Corralation between Kap Industrial and CoreShares Income

Assuming the 90 days trading horizon Kap Industrial Holdings is expected to under-perform the CoreShares Income. In addition to that, Kap Industrial is 12.88 times more volatile than CoreShares Income AMETF. It trades about -0.06 of its total potential returns per unit of risk. CoreShares Income AMETF is currently generating about 0.0 per unit of volatility. If you would invest  104,781  in CoreShares Income AMETF on December 4, 2024 and sell it today you would earn a total of  19.00  from holding CoreShares Income AMETF or generate 0.02% return on investment over 90 days.

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

Kap Industrial Holdings  vs.  CoreShares Income AMETF

Kap Industrial Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Kap Industrial Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

CoreShares Income AMETF

Risk-Adjusted Performance

Very Weak

Over the last 90 days CoreShares Income AMETF has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, CoreShares Income is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Kap Industrial and CoreShares Income

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

The idea behind Kap Industrial Holdings and CoreShares Income AMETF 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.

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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.