Correlation Between Commonwealth Global and Kinetics Global
Can any of the company-specific risk be diversified away by investing in both Commonwealth Global 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 Commonwealth Global and Kinetics Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Commonwealth Global Fund and Kinetics Global Fund, you can compare the effects of market volatilities on Commonwealth Global 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 Commonwealth Global with a short position of Kinetics Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Commonwealth Global and Kinetics Global.
Diversification Opportunities for Commonwealth Global and Kinetics Global
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Commonwealth and Kinetics is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Commonwealth Global Fund and Kinetics Global Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kinetics Global and Commonwealth Global 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 Commonwealth Global Fund 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 Commonwealth Global i.e., Commonwealth Global and Kinetics Global go up and down completely randomly.
Pair Corralation between Commonwealth Global and Kinetics Global
Assuming the 90 days horizon Commonwealth Global is expected to generate 13.68 times less return on investment than Kinetics Global. But when comparing it to its historical volatility, Commonwealth Global Fund is 2.34 times less risky than Kinetics Global. It trades about 0.09 of its potential returns per unit of risk. Kinetics Global Fund is currently generating about 0.52 of returns per unit of risk over similar time horizon. If you would invest 1,457 in Kinetics Global Fund on August 29, 2024 and sell it today you would earn a total of 362.00 from holding Kinetics Global Fund or generate 24.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Commonwealth Global Fund vs. Kinetics Global Fund
Performance |
| Timeline |
| Commonwealth Global |
| Kinetics Global |
Commonwealth Global and Kinetics Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Commonwealth Global and Kinetics Global
The main advantage of trading using opposite Commonwealth Global and Kinetics Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Commonwealth Global 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.| Commonwealth Global vs. Commonwealth Australianew Zealand | Commonwealth Global vs. Commonwealth Japan Fund | Commonwealth Global vs. Commonwealth Real Estate | Commonwealth Global vs. HUMANA INC |
| Kinetics Global vs. American Balanced Fund | Kinetics Global vs. American Balanced Fund | Kinetics Global vs. HUMANA INC | Kinetics Global vs. Aquagold International |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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