Correlation Between Kinetics Small and Delaware Investments

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

Diversification Opportunities for Kinetics Small and Delaware Investments

0.73

Correlation Coefficient

Kinetics Small  Delaware Investments

Poor diversification

The 3 months correlation between Kinetics and Delaware is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Kinetics Small Cap and Delaware Investments Ultrashor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Delaware Investments 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 Delaware Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Delaware Investments has no effect on the direction of Kinetics Small i.e., Kinetics Small and Delaware Investments go up and down completely randomly.

Pair Corralation between Kinetics Small and Delaware Investments

Assuming the 90 days horizon Kinetics Small Cap is expected to generate 19.82 times more return on investment than Delaware Investments. However, Kinetics Small is 19.82 times more volatile than Delaware Investments Ultrashort. It trades about 0.16 of its potential returns per unit of risk. Delaware Investments Ultrashort is currently generating about 0.15 per unit of risk. If you would invest  15,281  in Kinetics Small Cap on September 17, 2024 and sell it today you would earn a total of  3,725  from holding Kinetics Small Cap or generate 24.38% return on investment over 90 days.

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

Kinetics Small Cap  vs.  Delaware Investments Ultrashor

Kinetics Small Cap

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Kinetics Small Cap are ranked lower than 12 (%) 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.

Delaware Investments

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Delaware Investments Ultrashort are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Delaware Investments 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 Delaware Investments

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

The idea behind Kinetics Small Cap and Delaware Investments Ultrashort 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.