Correlation Between Strategic Allocation and Kennedy Capital

Can any of the company-specific risk be diversified away by investing in both Strategic Allocation and Kennedy Capital 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 Strategic Allocation and Kennedy Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Strategic Allocation Aggressive and Kennedy Capital Esg, you can compare the effects of market volatilities on Strategic Allocation and Kennedy Capital 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 Strategic Allocation with a short position of Kennedy Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Strategic Allocation and Kennedy Capital.

Diversification Opportunities for Strategic Allocation and Kennedy Capital

0.94

Correlation Coefficient

Strategic Allocation  Kennedy Capital

Almost no diversification

The 3 months correlation between Strategic and Kennedy is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Strategic Allocation Aggressiv and Kennedy Capital Esg in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kennedy Capital Esg and Strategic Allocation 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 Strategic Allocation Aggressive are associated (or correlated) with Kennedy Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kennedy Capital Esg has no effect on the direction of Strategic Allocation i.e., Strategic Allocation and Kennedy Capital go up and down completely randomly.

Pair Corralation between Strategic Allocation and Kennedy Capital

Assuming the 90 days horizon Strategic Allocation Aggressive is expected to generate 0.54 times more return on investment than Kennedy Capital. However, Strategic Allocation Aggressive is 1.85 times less risky than Kennedy Capital. It trades about -0.01 of its potential returns per unit of risk. Kennedy Capital Esg is currently generating about -0.01 per unit of risk. If you would invest  817.00  in Strategic Allocation Aggressive on September 21, 2024 and sell it today you would lose (5.00) from holding Strategic Allocation Aggressive or give up 0.61% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

Strategic Allocation Aggressiv  vs.  Kennedy Capital Esg

Strategic Allocation

Risk-Adjusted Performance

0 of 100

Very Weak

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

Kennedy Capital Esg

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Strategic Allocation and Kennedy Capital

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

The idea behind Strategic Allocation Aggressive and Kennedy Capital Esg 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.