Correlation Between American Funds and Kinetics Global
Can any of the company-specific risk be diversified away by investing in both American Funds 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 American Funds and Kinetics Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Funds 2050 and Kinetics Global Fund, you can compare the effects of market volatilities on American Funds 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 American Funds with a short position of Kinetics Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Funds and Kinetics Global.
Diversification Opportunities for American Funds and Kinetics Global
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between American and Kinetics is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding American Funds 2050 and Kinetics Global Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kinetics Global and American Funds 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 American Funds 2050 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 American Funds i.e., American Funds and Kinetics Global go up and down completely randomly.
Pair Corralation between American Funds and Kinetics Global
Assuming the 90 days horizon American Funds 2050 is expected to generate 0.62 times more return on investment than Kinetics Global. However, American Funds 2050 is 1.62 times less risky than Kinetics Global. It trades about 0.01 of its potential returns per unit of risk. Kinetics Global Fund is currently generating about -0.01 per unit of risk. If you would invest 2,140 in American Funds 2050 on November 27, 2024 and sell it today you would earn a total of 2.00 from holding American Funds 2050 or generate 0.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Funds 2050 vs. Kinetics Global Fund
Performance |
| Timeline |
| American Funds 2050 |
| Kinetics Global |
American Funds and Kinetics Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Funds and Kinetics Global
The main advantage of trading using opposite American Funds and Kinetics Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Funds 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.| American Funds vs. Ab Small Cap | American Funds vs. Needham Small Cap | American Funds vs. Legg Mason Partners | American Funds vs. Artisan Small Cap |
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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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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