Correlation Between GM and Kinetics Global
Can any of the company-specific risk be diversified away by investing in both GM 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 GM and Kinetics Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Kinetics Global Fund, you can compare the effects of market volatilities on GM 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 GM with a short position of Kinetics Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Kinetics Global.
Diversification Opportunities for GM and Kinetics Global
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between GM and Kinetics is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Kinetics Global Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kinetics Global and GM 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 General Motors 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 GM i.e., GM and Kinetics Global go up and down completely randomly.
Pair Corralation between GM and Kinetics Global
Allowing for the 90-day total investment horizon GM is expected to generate 1.97 times less return on investment than Kinetics Global. In addition to that, GM is 1.47 times more volatile than Kinetics Global Fund. It trades about 0.17 of its total potential returns per unit of risk. Kinetics Global Fund is currently generating about 0.48 per unit of volatility. If you would invest 1,468 in Kinetics Global Fund on September 1, 2024 and sell it today you would earn a total of 325.00 from holding Kinetics Global Fund or generate 22.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
General Motors vs. Kinetics Global Fund
Performance |
| Timeline |
| General Motors |
| Kinetics Global |
GM and Kinetics Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Kinetics Global
The main advantage of trading using opposite GM and Kinetics Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM 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.The idea behind General Motors and Kinetics Global 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.| Kinetics Global vs. Kinetics Global Fund | Kinetics Global vs. Kinetics Paradigm Fund | Kinetics Global vs. Kinetics Internet Fund | Kinetics Global vs. Kinetics Global Fund |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
Other Complementary Tools
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| CEOs Directory Screen CEOs from public companies around the world | |
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance |