Correlation Between Kinetics Market and Dreyfus Active

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

By analyzing existing cross correlation between Kinetics Market Opportunities and Dreyfus Active Midcap, you can compare the effects of market volatilities on Kinetics Market and Dreyfus Active 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 Kinetics Market with a short position of Dreyfus Active. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kinetics Market and Dreyfus Active.

Diversification Opportunities for Kinetics Market and Dreyfus Active

0.7

Correlation Coefficient

Kinetics Market  Dreyfus Active

Poor diversification

The 3 months correlation between Kinetics and Dreyfus is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Kinetics Market Opportunities and Dreyfus Active Midcap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dreyfus Active Midcap and Kinetics Market 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 Kinetics Market Opportunities are associated (or correlated) with Dreyfus Active. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dreyfus Active Midcap has no effect on the direction of Kinetics Market i.e., Kinetics Market and Dreyfus Active go up and down completely randomly.

Pair Corralation between Kinetics Market and Dreyfus Active

Assuming the 90 days horizon Kinetics Market Opportunities is expected to under-perform the Dreyfus Active. In addition to that, Kinetics Market is 1.42 times more volatile than Dreyfus Active Midcap. It trades about -0.28 of its total potential returns per unit of risk. Dreyfus Active Midcap is currently generating about -0.3 per unit of volatility. If you would invest  6,846  in Dreyfus Active Midcap on September 27, 2024 and sell it today you would lose (788.00) from holding Dreyfus Active Midcap or give up 11.51% of portfolio value over 90 days.

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

Kinetics Market Opportunities  vs.  Dreyfus Active Midcap

Kinetics Market Oppo

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Kinetics Market Opportunities are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Kinetics Market showed solid returns over the last few months and may actually be approaching a breakup point.

Dreyfus Active Midcap

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Kinetics Market and Dreyfus Active

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

The idea behind Kinetics Market Opportunities and Dreyfus Active Midcap 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.