Correlation Between Kinetics Small and Brookfield Global

Can any of the company-specific risk be diversified away by investing in both Kinetics Small and Brookfield Global 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 Kinetics Small and Brookfield Global into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Kinetics Small Cap and Brookfield Global Listed, you can compare the effects of market volatilities on Kinetics Small and Brookfield Global 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 Kinetics Small with a short position of Brookfield Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kinetics Small and Brookfield Global.

Diversification Opportunities for Kinetics Small and Brookfield Global

-0.66

Correlation Coefficient

Kinetics Small  Brookfield Global

Excellent diversification

The 3 months correlation between Kinetics and Brookfield is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Kinetics Small Cap and Brookfield Global Listed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brookfield Global Listed and Kinetics Small 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 Kinetics Small Cap are associated (or correlated) with Brookfield Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brookfield Global Listed has no effect on the direction of Kinetics Small i.e., Kinetics Small and Brookfield Global go up and down completely randomly.

Pair Corralation between Kinetics Small and Brookfield Global

Assuming the 90 days horizon Kinetics Small Cap is expected to generate 3.27 times more return on investment than Brookfield Global. However, Kinetics Small is 3.27 times more volatile than Brookfield Global Listed. It trades about 0.25 of its potential returns per unit of risk. Brookfield Global Listed is currently generating about -0.1 per unit of risk. If you would invest  14,039  in Kinetics Small Cap on September 12, 2024 and sell it today you would earn a total of  5,591  from holding Kinetics Small Cap or generate 39.82% return on investment over 90 days.

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

Kinetics Small Cap  vs.  Brookfield Global Listed

Kinetics Small Cap

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Kinetics Small Cap are ranked lower than 19 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Kinetics Small showed solid returns over the last few months and may actually be approaching a breakup point.

Brookfield Global Listed

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Kinetics Small and Brookfield Global

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

The idea behind Kinetics Small Cap and Brookfield Global Listed 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.

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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.