Correlation Between Kennedy Capital and American Funds
Can any of the company-specific risk be diversified away by investing in both Kennedy Capital and American Funds 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 American Funds 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 American Funds Inflation, you can compare the effects of market volatilities on Kennedy Capital and American Funds 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 American Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kennedy Capital and American Funds.
Diversification Opportunities for Kennedy Capital and American Funds
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Kennedy and American is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Kennedy Capital Small and American Funds Inflation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Funds 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 American Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Funds Inflation has no effect on the direction of Kennedy Capital i.e., Kennedy Capital and American Funds go up and down completely randomly.
Pair Corralation between Kennedy Capital and American Funds
Assuming the 90 days horizon Kennedy Capital Small is expected to generate 3.16 times more return on investment than American Funds. However, Kennedy Capital is 3.16 times more volatile than American Funds Inflation. It trades about 0.04 of its potential returns per unit of risk. American Funds Inflation is currently generating about -0.2 per unit of risk. If you would invest 1,231 in Kennedy Capital Small on September 24, 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 | 100.0% |
Values | Daily Returns |
Kennedy Capital Small vs. American Funds Inflation
Performance |
Timeline |
Kennedy Capital Small |
American Funds Inflation |
Kennedy Capital and American Funds Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Kennedy Capital and American Funds
The main advantage of trading using opposite Kennedy Capital and American Funds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kennedy Capital position performs unexpectedly, American Funds 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 American Funds will offset losses from the drop in American Funds' long position.Kennedy Capital vs. American Funds Inflation | Kennedy Capital vs. Schwab Treasury Inflation | Kennedy Capital vs. Fidelity Sai Inflationfocused | Kennedy Capital vs. Guidepath Managed Futures |
American Funds vs. Income Fund Of | American Funds vs. New World Fund | American Funds vs. American Mutual Fund | American Funds vs. American Mutual Fund |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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