Correlation Between Kinetics Small and North Square
Can any of the company-specific risk be diversified away by investing in both Kinetics Small and North Square 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 North Square 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 North Square Kennedy, you can compare the effects of market volatilities on Kinetics Small and North Square 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 North Square. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kinetics Small and North Square.
Diversification Opportunities for Kinetics Small and North Square
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Kinetics and North is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Kinetics Small Cap and North Square Kennedy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on North Square Kennedy 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 North Square. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of North Square Kennedy has no effect on the direction of Kinetics Small i.e., Kinetics Small and North Square go up and down completely randomly.
Pair Corralation between Kinetics Small and North Square
Assuming the 90 days horizon Kinetics Small Cap is expected to generate 1.75 times more return on investment than North Square. However, Kinetics Small is 1.75 times more volatile than North Square Kennedy. It trades about 0.07 of its potential returns per unit of risk. North Square Kennedy is currently generating about -0.03 per unit of risk. If you would invest 17,437 in Kinetics Small Cap on December 29, 2024 and sell it today you would earn a total of 1,498 from holding Kinetics Small Cap or generate 8.59% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 98.39% |
Values | Daily Returns |
Kinetics Small Cap vs. North Square Kennedy
Performance |
Timeline |
Kinetics Small Cap |
North Square Kennedy |
Kinetics Small and North Square Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Kinetics Small and North Square
The main advantage of trading using opposite Kinetics Small and North Square positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kinetics Small position performs unexpectedly, North Square 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 North Square will offset losses from the drop in North Square's long position.Kinetics Small vs. Global Diversified Income | Kinetics Small vs. Mfs Diversified Income | Kinetics Small vs. Federated Hermes Conservative | Kinetics Small vs. Aqr Diversified Arbitrage |
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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 Transaction History module to view history of all your transactions and understand their impact on performance.
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