Correlation Between Kinetics Small and Blackrock Large

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

Diversification Opportunities for Kinetics Small and Blackrock Large

0.51

Correlation Coefficient

Kinetics Small  Blackrock Large

Very weak diversification

The 3 months correlation between Kinetics and Blackrock is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Kinetics Small Cap and Blackrock Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blackrock Large Cap 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 Blackrock Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blackrock Large Cap has no effect on the direction of Kinetics Small i.e., Kinetics Small and Blackrock Large go up and down completely randomly.

Pair Corralation between Kinetics Small and Blackrock Large

Assuming the 90 days horizon Kinetics Small Cap is expected to under-perform the Blackrock Large. In addition to that, Kinetics Small is 1.91 times more volatile than Blackrock Large Cap. It trades about -0.21 of its total potential returns per unit of risk. Blackrock Large Cap is currently generating about -0.09 per unit of volatility. If you would invest  913.00  in Blackrock Large Cap on October 7, 2024 and sell it today you would lose (21.00) from holding Blackrock Large Cap or give up 2.3% of portfolio value over 90 days.

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

Kinetics Small Cap  vs.  Blackrock Large Cap

Kinetics Small Cap

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Kinetics Small Cap are ranked lower than 6 (%) 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.

Blackrock Large Cap

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Blackrock Large Cap are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Blackrock Large may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Kinetics Small and Blackrock Large

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

The idea behind Kinetics Small Cap and Blackrock Large Cap 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.