Correlation Between Kennedy Capital and Ab Bond

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

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

Diversification Opportunities for Kennedy Capital and Ab Bond

-0.37

Correlation Coefficient

Kennedy Capital  Ab Bond

Very good diversification

The 3 months correlation between Kennedy and ANBIX is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Kennedy Capital Small and Ab Bond Inflation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ab Bond Inflation and Kennedy Capital 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 Kennedy Capital Small are associated (or correlated) with Ab Bond. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ab Bond Inflation has no effect on the direction of Kennedy Capital i.e., Kennedy Capital and Ab Bond go up and down completely randomly.

Pair Corralation between Kennedy Capital and Ab Bond

Assuming the 90 days horizon Kennedy Capital Small is expected to generate 6.83 times more return on investment than Ab Bond. However, Kennedy Capital is 6.83 times more volatile than Ab Bond Inflation. It trades about 0.04 of its potential returns per unit of risk. Ab Bond Inflation is currently generating about -0.2 per unit of risk. If you would invest  1,231  in Kennedy Capital Small on September 22, 2024 and sell it today you would earn a total of  39.00  from holding Kennedy Capital Small or generate 3.17% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.46%
Values	Daily Returns

Kennedy Capital Small  vs.  Ab Bond Inflation

Kennedy Capital Small

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Kennedy Capital Small are ranked lower than 3 (%) 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.

Ab Bond Inflation

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Kennedy Capital and Ab Bond

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

The idea behind Kennedy Capital Small and Ab Bond Inflation 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.