Correlation Between Invesco Peak and Kinetics Small

Can any of the company-specific risk be diversified away by investing in both Invesco Peak and Kinetics Small 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 Invesco Peak and Kinetics Small into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Invesco Peak Retirement and Kinetics Small Cap, you can compare the effects of market volatilities on Invesco Peak and Kinetics Small 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 Invesco Peak with a short position of Kinetics Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco Peak and Kinetics Small.

Diversification Opportunities for Invesco Peak and Kinetics Small

-0.36

Correlation Coefficient

Invesco Peak  Kinetics Small

Very good diversification

The 3 months correlation between Invesco and Kinetics is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Invesco Peak Retirement and Kinetics Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kinetics Small Cap and Invesco Peak 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 Invesco Peak Retirement are associated (or correlated) with Kinetics Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kinetics Small Cap has no effect on the direction of Invesco Peak i.e., Invesco Peak and Kinetics Small go up and down completely randomly.

Pair Corralation between Invesco Peak and Kinetics Small

If you would invest  14,501  in Kinetics Small Cap on September 2, 2024 and sell it today you would earn a total of  8,297  from holding Kinetics Small Cap or generate 57.22% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	1.56%
Values	Daily Returns

Invesco Peak Retirement  vs.  Kinetics Small Cap

Invesco Peak Retirement

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Invesco Peak Retirement has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Invesco Peak is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Kinetics Small Cap

Risk-Adjusted Performance

30 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Kinetics Small Cap are ranked lower than 30 (%) 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.

Pair Trading with Invesco Peak and Kinetics Small

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

The idea behind Invesco Peak Retirement and Kinetics Small 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.