Correlation Between KFA Mount and Even Herd

Can any of the company-specific risk be diversified away by investing in both KFA Mount and Even Herd 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 KFA Mount and Even Herd into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between KFA Mount Lucas and Even Herd Long, you can compare the effects of market volatilities on KFA Mount and Even Herd 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 KFA Mount with a short position of Even Herd. Check out your portfolio center. Please also check ongoing floating volatility patterns of KFA Mount and Even Herd.

Diversification Opportunities for KFA Mount and Even Herd

-0.69

Correlation Coefficient

KFA Mount  Even Herd

Excellent diversification

The 3 months correlation between KFA and Even is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding KFA Mount Lucas and Even Herd Long in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Even Herd Long and KFA Mount 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 KFA Mount Lucas are associated (or correlated) with Even Herd. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Even Herd Long has no effect on the direction of KFA Mount i.e., KFA Mount and Even Herd go up and down completely randomly.

Pair Corralation between KFA Mount and Even Herd

Given the investment horizon of 90 days KFA Mount Lucas is expected to under-perform the Even Herd. But the etf apears to be less risky and, when comparing its historical volatility, KFA Mount Lucas is 1.36 times less risky than Even Herd. The etf trades about -0.14 of its potential returns per unit of risk. The Even Herd Long is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  2,039  in Even Herd Long on September 12, 2024 and sell it today you would earn a total of  256.00  from holding Even Herd Long or generate 12.56% return on investment over 90 days.

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

KFA Mount Lucas  vs.  Even Herd Long

KFA Mount Lucas

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days KFA Mount Lucas has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Etf's essential indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the ETF investors.

Even Herd Long

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Even Herd Long are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak essential indicators, Even Herd may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with KFA Mount and Even Herd

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

The idea behind KFA Mount Lucas and Even Herd Long 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.