Correlation Between Kennedy Capital and Resq Dynamic

Can any of the company-specific risk be diversified away by investing in both Kennedy Capital and Resq Dynamic 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 Resq Dynamic 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 Resq Dynamic Allocation, you can compare the effects of market volatilities on Kennedy Capital and Resq Dynamic 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 Resq Dynamic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kennedy Capital and Resq Dynamic.

Diversification Opportunities for Kennedy Capital and Resq Dynamic

0.77

Correlation Coefficient

Kennedy Capital  Resq Dynamic

Poor diversification

The 3 months correlation between Kennedy and Resq is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Kennedy Capital Small and Resq Dynamic Allocation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Resq Dynamic Allocation 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 Resq Dynamic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Resq Dynamic Allocation has no effect on the direction of Kennedy Capital i.e., Kennedy Capital and Resq Dynamic go up and down completely randomly.

Pair Corralation between Kennedy Capital and Resq Dynamic

Assuming the 90 days horizon Kennedy Capital is expected to generate 3.12 times less return on investment than Resq Dynamic. In addition to that, Kennedy Capital is 1.06 times more volatile than Resq Dynamic Allocation. It trades about 0.04 of its total potential returns per unit of risk. Resq Dynamic Allocation is currently generating about 0.14 per unit of volatility. If you would invest  933.00  in Resq Dynamic Allocation on September 22, 2024 and sell it today you would earn a total of  109.00  from holding Resq Dynamic Allocation or generate 11.68% return on investment over 90 days.

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

Kennedy Capital Small  vs.  Resq Dynamic Allocation

Kennedy Capital Small

Risk-Adjusted Performance

3 of 100

Weak

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.

Resq Dynamic Allocation

Risk-Adjusted Performance

10 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Resq Dynamic Allocation are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Resq Dynamic may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Kennedy Capital and Resq Dynamic

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

The idea behind Kennedy Capital Small and Resq Dynamic Allocation 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.