Correlation Between Multimedia Portfolio and Kinetics Small

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

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

Diversification Opportunities for Multimedia Portfolio and Kinetics Small

0.55

Correlation Coefficient

Multimedia Portfolio  Kinetics Small

Very weak diversification

The 3 months correlation between Multimedia and Kinetics is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Multimedia Portfolio Multimedi 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 Multimedia Portfolio 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 Multimedia Portfolio Multimedia 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 Multimedia Portfolio i.e., Multimedia Portfolio and Kinetics Small go up and down completely randomly.

Pair Corralation between Multimedia Portfolio and Kinetics Small

Assuming the 90 days horizon Multimedia Portfolio Multimedia is expected to generate 0.8 times more return on investment than Kinetics Small. However, Multimedia Portfolio Multimedia is 1.24 times less risky than Kinetics Small. It trades about 0.12 of its potential returns per unit of risk. Kinetics Small Cap is currently generating about 0.06 per unit of risk. If you would invest  5,917  in Multimedia Portfolio Multimedia on September 28, 2024 and sell it today you would earn a total of  5,582  from holding Multimedia Portfolio Multimedia or generate 94.34% return on investment over 90 days.

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

Multimedia Portfolio Multimedi  vs.  Kinetics Small Cap

Multimedia Portfolio

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Multimedia Portfolio Multimedia are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Multimedia Portfolio may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Kinetics Small Cap

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Kinetics Small Cap are ranked lower than 10 (%) 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 Multimedia Portfolio and Kinetics Small

The main advantage of trading using opposite Multimedia Portfolio and Kinetics Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Multimedia Portfolio 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 Multimedia Portfolio Multimedia 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.

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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.