Correlation Between Kinetics Small and Tiaa-cref International

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

Diversification Opportunities for Kinetics Small and Tiaa-cref International

-0.16

Correlation Coefficient

Kinetics Small  Tiaa-cref International

Good diversification

The 3 months correlation between Kinetics and Tiaa-cref is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Kinetics Small Cap and Tiaa Cref International Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tiaa Cref International 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 International. 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 International has no effect on the direction of Kinetics Small i.e., Kinetics Small and Tiaa-cref International go up and down completely randomly.

Pair Corralation between Kinetics Small and Tiaa-cref International

Assuming the 90 days horizon Kinetics Small Cap is expected to under-perform the Tiaa-cref International. In addition to that, Kinetics Small is 2.9 times more volatile than Tiaa Cref International Equity. It trades about -0.14 of its total potential returns per unit of risk. Tiaa Cref International Equity is currently generating about -0.23 per unit of volatility. If you would invest  1,456  in Tiaa Cref International Equity on October 10, 2024 and sell it today you would lose (54.00) from holding Tiaa Cref International Equity or give up 3.71% of portfolio value over 90 days.

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

Kinetics Small Cap  vs.  Tiaa Cref International Equity

Kinetics Small Cap

Risk-Adjusted Performance

6 of 100

OK

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 showed solid returns over the last few months and may actually be approaching a breakup point.

Tiaa Cref International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tiaa Cref International Equity has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Tiaa-cref International 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 International

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

The idea behind Kinetics Small Cap and Tiaa Cref International Equity 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.