Correlation Between Kinetics Market and Northern Lights
Can any of the company-specific risk be diversified away by investing in both Kinetics Market and Northern Lights 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 Kinetics Market and Northern Lights into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kinetics Market Opportunities and Northern Lights, you can compare the effects of market volatilities on Kinetics Market and Northern Lights 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 Kinetics Market with a short position of Northern Lights. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kinetics Market and Northern Lights.
Diversification Opportunities for Kinetics Market and Northern Lights
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Kinetics and Northern is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Kinetics Market Opportunities and Northern Lights in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northern Lights and Kinetics Market 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 Kinetics Market Opportunities are associated (or correlated) with Northern Lights. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Northern Lights has no effect on the direction of Kinetics Market i.e., Kinetics Market and Northern Lights go up and down completely randomly.
Pair Corralation between Kinetics Market and Northern Lights
Assuming the 90 days horizon Kinetics Market Opportunities is expected to generate 4.02 times more return on investment than Northern Lights. However, Kinetics Market is 4.02 times more volatile than Northern Lights. It trades about 0.45 of its potential returns per unit of risk. Northern Lights is currently generating about 0.21 per unit of risk. If you would invest 7,170 in Kinetics Market Opportunities on August 29, 2024 and sell it today you would earn a total of 2,275 from holding Kinetics Market Opportunities or generate 31.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kinetics Market Opportunities vs. Northern Lights
Performance |
| Timeline |
| Kinetics Market Oppo |
| Northern Lights |
Kinetics Market and Northern Lights Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kinetics Market and Northern Lights
The main advantage of trading using opposite Kinetics Market and Northern Lights positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kinetics Market position performs unexpectedly, Northern Lights 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 Northern Lights will offset losses from the drop in Northern Lights' long position.| Kinetics Market vs. Kinetics Market Opportunities | Kinetics Market vs. Kinetics Small Cap | Kinetics Market vs. Kinetics Paradigm Fund | Kinetics Market vs. Alger Capital Appreciation |
| Northern Lights vs. Qs Large Cap | Northern Lights vs. Pace Large Value | Northern Lights vs. Dodge Cox Stock | Northern Lights vs. American Mutual 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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