Correlation Between Kinetics Small and Center St

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

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

Diversification Opportunities for Kinetics Small and Center St

0.96

Correlation Coefficient

Kinetics Small  Center St

Almost no diversification

The 3 months correlation between Kinetics and Center is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Kinetics Small Cap and Center St Mlp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Center St Mlp and Kinetics Small 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 Small Cap are associated (or correlated) with Center St. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Center St Mlp has no effect on the direction of Kinetics Small i.e., Kinetics Small and Center St go up and down completely randomly.

Pair Corralation between Kinetics Small and Center St

Assuming the 90 days horizon Kinetics Small Cap is expected to generate 2.1 times more return on investment than Center St. However, Kinetics Small is 2.1 times more volatile than Center St Mlp. It trades about 0.13 of its potential returns per unit of risk. Center St Mlp is currently generating about 0.19 per unit of risk. If you would invest  11,263  in Kinetics Small Cap on September 12, 2024 and sell it today you would earn a total of  7,902  from holding Kinetics Small Cap or generate 70.16% return on investment over 90 days.

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

Kinetics Small Cap  vs.  Center St Mlp

Kinetics Small Cap

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Kinetics Small Cap are ranked lower than 16 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Kinetics Small showed solid returns over the last few months and may actually be approaching a breakup point.

Center St Mlp

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Center St Mlp are ranked lower than 16 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Center St showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Kinetics Small and Center St

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

The idea behind Kinetics Small Cap and Center St Mlp 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.