Correlation Between Kinetics Small and Dunham Monthly

Can any of the company-specific risk be diversified away by investing in both Kinetics Small and Dunham Monthly 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 Dunham Monthly 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 Dunham Monthly Distribution, you can compare the effects of market volatilities on Kinetics Small and Dunham Monthly 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 Dunham Monthly. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kinetics Small and Dunham Monthly.

Diversification Opportunities for Kinetics Small and Dunham Monthly

0.76

Correlation Coefficient

Kinetics Small  Dunham Monthly

Poor diversification

The 3 months correlation between Kinetics and Dunham is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Kinetics Small Cap and Dunham Monthly Distribution in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dunham Monthly Distr 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 Dunham Monthly. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dunham Monthly Distr has no effect on the direction of Kinetics Small i.e., Kinetics Small and Dunham Monthly go up and down completely randomly.

Pair Corralation between Kinetics Small and Dunham Monthly

Assuming the 90 days horizon Kinetics Small Cap is expected to under-perform the Dunham Monthly. In addition to that, Kinetics Small is 9.2 times more volatile than Dunham Monthly Distribution. It trades about -0.42 of its total potential returns per unit of risk. Dunham Monthly Distribution is currently generating about -0.02 per unit of volatility. If you would invest  2,892  in Dunham Monthly Distribution on October 3, 2024 and sell it today you would lose (3.00) from holding Dunham Monthly Distribution or give up 0.1% of portfolio value over 90 days.

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

Kinetics Small Cap  vs.  Dunham Monthly Distribution

Kinetics Small Cap

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Kinetics Small Cap are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Kinetics Small may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Dunham Monthly Distr

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Dunham Monthly Distribution are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Dunham Monthly 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 Small and Dunham Monthly

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

The idea behind Kinetics Small Cap and Dunham Monthly Distribution 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.