Correlation Between Kennedy Capital and Short Term

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

Diversification Opportunities for Kennedy Capital and Short Term

-0.52

Correlation Coefficient

Kennedy Capital  Short Term

Excellent diversification

The 3 months correlation between Kennedy and Short is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Kennedy Capital Small and Short Term Government Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Short Term Government 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 Short Term. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Short Term Government has no effect on the direction of Kennedy Capital i.e., Kennedy Capital and Short Term go up and down completely randomly.

Pair Corralation between Kennedy Capital and Short Term

Assuming the 90 days horizon Kennedy Capital Small is expected to under-perform the Short Term. In addition to that, Kennedy Capital is 13.83 times more volatile than Short Term Government Fund. It trades about -0.03 of its total potential returns per unit of risk. Short Term Government Fund is currently generating about -0.17 per unit of volatility. If you would invest  901.00  in Short Term Government Fund on September 20, 2024 and sell it today you would lose (10.00) from holding Short Term Government Fund or give up 1.11% of portfolio value over 90 days.

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

Kennedy Capital Small  vs.  Short Term Government Fund

Kennedy Capital Small

Risk-Adjusted Performance

0 of 100

Very Weak

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

Short Term Government

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Short Term Government Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental indicators, Short Term 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 Short Term

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

The idea behind Kennedy Capital Small and Short Term Government Fund 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.