Correlation Between Applied Finance and Kinetics Global
Can any of the company-specific risk be diversified away by investing in both Applied Finance and Kinetics 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 Applied Finance and Kinetics Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Applied Finance Explorer and Kinetics Global Fund, you can compare the effects of market volatilities on Applied Finance and Kinetics 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 Applied Finance with a short position of Kinetics Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Applied Finance and Kinetics Global.
Diversification Opportunities for Applied Finance and Kinetics Global
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Applied and Kinetics is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Applied Finance Explorer and Kinetics Global Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kinetics Global and Applied Finance 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 Applied Finance Explorer are associated (or correlated) with Kinetics Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kinetics Global has no effect on the direction of Applied Finance i.e., Applied Finance and Kinetics Global go up and down completely randomly.
Pair Corralation between Applied Finance and Kinetics Global
Assuming the 90 days horizon Applied Finance Explorer is expected to under-perform the Kinetics Global. But the mutual fund apears to be less risky and, when comparing its historical volatility, Applied Finance Explorer is 1.79 times less risky than Kinetics Global. The mutual fund trades about -0.57 of its potential returns per unit of risk. The Kinetics Global Fund is currently generating about -0.29 of returns per unit of risk over similar time horizon. If you would invest 1,632 in Kinetics Global Fund on September 24, 2024 and sell it today you would lose (145.00) from holding Kinetics Global Fund or give up 8.88% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Applied Finance Explorer vs. Kinetics Global Fund
Performance |
| Timeline |
| Applied Finance Explorer |
| Kinetics Global |
Applied Finance and Kinetics Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Applied Finance and Kinetics Global
The main advantage of trading using opposite Applied Finance and Kinetics Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Applied Finance position performs unexpectedly, Kinetics 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 Kinetics Global will offset losses from the drop in Kinetics Global's long position.| Applied Finance vs. Thrivent Small Cap | Applied Finance vs. Applied Finance Select | Applied Finance vs. Parnassus Endeavor Fund | Applied Finance vs. Queens Road Small |
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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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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