Correlation Between James Alpha and Kennedy Capital

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

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

Diversification Opportunities for James Alpha and Kennedy Capital

0.61

Correlation Coefficient

James Alpha  Kennedy Capital

Poor diversification

The 3 months correlation between James and Kennedy is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding James Alpha Structured and Kennedy Capital Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kennedy Capital Small and James Alpha 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 James Alpha Structured 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 Small has no effect on the direction of James Alpha i.e., James Alpha and Kennedy Capital go up and down completely randomly.

Pair Corralation between James Alpha and Kennedy Capital

Assuming the 90 days horizon James Alpha Structured is not expected to generate positive returns. However, James Alpha Structured is 14.77 times less risky than Kennedy Capital. It waists most of its returns potential to compensate for thr risk taken. Kennedy Capital is generating about -0.08 per unit of risk. If you would invest  1,014  in James Alpha Structured on September 20, 2024 and sell it today you would earn a total of  0.00  from holding James Alpha Structured or generate 0.0% return on investment over 90 days.

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

James Alpha Structured  vs.  Kennedy Capital Small

James Alpha Structured

Risk-Adjusted Performance

8 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in James Alpha Structured are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, James Alpha is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Kennedy Capital Small

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Kennedy Capital Small are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic 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 James Alpha and Kennedy Capital

The main advantage of trading using opposite James Alpha and Kennedy Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if James Alpha 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 James Alpha Structured and Kennedy Capital Small 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.