Correlation Between Nova Fund and Kennedy Capital

Can any of the company-specific risk be diversified away by investing in both Nova Fund and Kennedy Capital 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 Nova Fund and Kennedy Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Nova Fund Class and Kennedy Capital Small, you can compare the effects of market volatilities on Nova Fund and Kennedy Capital 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 Nova Fund with a short position of Kennedy Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nova Fund and Kennedy Capital.

Diversification Opportunities for Nova Fund and Kennedy Capital

0.92

Correlation Coefficient

Nova Fund  Kennedy Capital

Almost no diversification

The 3 months correlation between Nova and Kennedy is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Nova Fund Class and Kennedy Capital Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kennedy Capital Small and Nova Fund 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 Nova Fund Class are associated (or correlated) with Kennedy Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kennedy Capital Small has no effect on the direction of Nova Fund i.e., Nova Fund and Kennedy Capital go up and down completely randomly.

Pair Corralation between Nova Fund and Kennedy Capital

Assuming the 90 days horizon Nova Fund Class is expected to generate 0.84 times more return on investment than Kennedy Capital. However, Nova Fund Class is 1.19 times less risky than Kennedy Capital. It trades about 0.09 of its potential returns per unit of risk. Kennedy Capital Small is currently generating about 0.04 per unit of risk. If you would invest  10,181  in Nova Fund Class on September 27, 2024 and sell it today you would earn a total of  616.00  from holding Nova Fund Class or generate 6.05% return on investment over 90 days.

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

Nova Fund Class  vs.  Kennedy Capital Small

Nova Fund Class

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Nova Fund Class are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Nova Fund may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Kennedy Capital Small

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Kennedy Capital Small are ranked lower than 2 (%) 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.

Pair Trading with Nova Fund and Kennedy Capital

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

The idea behind Nova Fund Class and Kennedy Capital Small 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.