Correlation Between Kinetics Small and Tiaa-cref High-yield

Can any of the company-specific risk be diversified away by investing in both Kinetics Small and Tiaa-cref High-yield 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 Tiaa-cref High-yield 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 Tiaa Cref High Yield Fund, you can compare the effects of market volatilities on Kinetics Small and Tiaa-cref High-yield 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 Tiaa-cref High-yield. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kinetics Small and Tiaa-cref High-yield.

Diversification Opportunities for Kinetics Small and Tiaa-cref High-yield

0.45

Correlation Coefficient

Kinetics Small  Tiaa-cref High-yield

Very weak diversification

The 3 months correlation between Kinetics and Tiaa-cref is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Kinetics Small Cap and Tiaa Cref High Yield Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tiaa-cref High-yield 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 Tiaa-cref High-yield. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tiaa-cref High-yield has no effect on the direction of Kinetics Small i.e., Kinetics Small and Tiaa-cref High-yield go up and down completely randomly.

Pair Corralation between Kinetics Small and Tiaa-cref High-yield

Assuming the 90 days horizon Kinetics Small Cap is expected to generate 11.93 times more return on investment than Tiaa-cref High-yield. However, Kinetics Small is 11.93 times more volatile than Tiaa Cref High Yield Fund. It trades about 0.12 of its potential returns per unit of risk. Tiaa Cref High Yield Fund is currently generating about 0.16 per unit of risk. If you would invest  17,366  in Kinetics Small Cap on October 23, 2024 and sell it today you would earn a total of  2,967  from holding Kinetics Small Cap or generate 17.09% 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.  Tiaa Cref High Yield Fund

Kinetics Small Cap

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Kinetics Small Cap are ranked lower than 9 (%) 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.

Tiaa-cref High-yield

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Tiaa Cref High Yield Fund are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Tiaa-cref High-yield 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 Tiaa-cref High-yield

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

The idea behind Kinetics Small Cap and Tiaa Cref High Yield Fund 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.