Correlation Between Kinetics Small and Midas Special
Can any of the company-specific risk be diversified away by investing in both Kinetics Small and Midas Special 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 Midas Special 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 Midas Special Fund, you can compare the effects of market volatilities on Kinetics Small and Midas Special 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 Midas Special. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kinetics Small and Midas Special.
Diversification Opportunities for Kinetics Small and Midas Special
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Kinetics and Midas is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Kinetics Small Cap and Midas Special Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Midas Special 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 Midas Special. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Midas Special has no effect on the direction of Kinetics Small i.e., Kinetics Small and Midas Special go up and down completely randomly.
Pair Corralation between Kinetics Small and Midas Special
Assuming the 90 days horizon Kinetics Small Cap is expected to generate 2.66 times more return on investment than Midas Special. However, Kinetics Small is 2.66 times more volatile than Midas Special Fund. It trades about 0.14 of its potential returns per unit of risk. Midas Special Fund is currently generating about 0.18 per unit of risk. If you would invest 15,810 in Kinetics Small Cap on September 19, 2024 and sell it today you would earn a total of 3,205 from holding Kinetics Small Cap or generate 20.27% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Kinetics Small Cap vs. Midas Special Fund
Performance |
Timeline |
Kinetics Small Cap |
Midas Special |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Good
Kinetics Small and Midas Special Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Kinetics Small and Midas Special
The main advantage of trading using opposite Kinetics Small and Midas Special positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kinetics Small position performs unexpectedly, Midas Special 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 Midas Special will offset losses from the drop in Midas Special's long position.Kinetics Small vs. Tekla Healthcare Opportunities | ||
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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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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