Correlation Between Kinetics Small and Macquariefirst

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

Diversification Opportunities for Kinetics Small and Macquariefirst

0.95

Correlation Coefficient

Kinetics Small  Macquariefirst

Almost no diversification

The 3 months correlation between Kinetics and Macquariefirst is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Kinetics Small Cap and Macquariefirst Tr Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Macquariefirst Tr Global 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 Macquariefirst. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Macquariefirst Tr Global has no effect on the direction of Kinetics Small i.e., Kinetics Small and Macquariefirst go up and down completely randomly.

Pair Corralation between Kinetics Small and Macquariefirst

Assuming the 90 days horizon Kinetics Small Cap is expected to generate 2.26 times more return on investment than Macquariefirst. However, Kinetics Small is 2.26 times more volatile than Macquariefirst Tr Global. It trades about 0.34 of its potential returns per unit of risk. Macquariefirst Tr Global is currently generating about 0.05 per unit of risk. If you would invest  13,217  in Kinetics Small Cap on August 30, 2024 and sell it today you would earn a total of  6,734  from holding Kinetics Small Cap or generate 50.95% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	25.4%
Values	Daily Returns

Kinetics Small Cap  vs.  Macquariefirst Tr Global

Kinetics Small Cap

Risk-Adjusted Performance

26 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Kinetics Small Cap are ranked lower than 26 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Kinetics Small showed solid returns over the last few months and may actually be approaching a breakup point.

Macquariefirst Tr Global

Risk-Adjusted Performance

0 of 100

Insignificant

Over the last 90 days Macquariefirst Tr Global has generated negative risk-adjusted returns adding no value to fund investors. In spite of rather sound technical and fundamental indicators, Macquariefirst is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Kinetics Small and Macquariefirst

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

The idea behind Kinetics Small Cap and Macquariefirst Tr Global 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.