Correlation Between Kinetics Paradigm and Kinetics Small
Can any of the company-specific risk be diversified away by investing in both Kinetics Paradigm and Kinetics Small 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 Paradigm and Kinetics Small into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kinetics Paradigm Fund and Kinetics Small Cap, you can compare the effects of market volatilities on Kinetics Paradigm and Kinetics Small 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 Paradigm with a short position of Kinetics Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kinetics Paradigm and Kinetics Small.
Diversification Opportunities for Kinetics Paradigm and Kinetics Small
1.0 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Kinetics and Kinetics is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding Kinetics Paradigm Fund and Kinetics Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kinetics Small Cap and Kinetics Paradigm 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 Paradigm Fund are associated (or correlated) with Kinetics Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kinetics Small Cap has no effect on the direction of Kinetics Paradigm i.e., Kinetics Paradigm and Kinetics Small go up and down completely randomly.
Pair Corralation between Kinetics Paradigm and Kinetics Small
Assuming the 90 days horizon Kinetics Paradigm Fund is expected to generate 1.21 times more return on investment than Kinetics Small. However, Kinetics Paradigm is 1.21 times more volatile than Kinetics Small Cap. It trades about 0.16 of its potential returns per unit of risk. Kinetics Small Cap is currently generating about 0.16 per unit of risk. If you would invest 6,853 in Kinetics Paradigm Fund on September 1, 2024 and sell it today you would earn a total of 8,633 from holding Kinetics Paradigm Fund or generate 125.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 99.63% |
| Values | Daily Returns |
Kinetics Paradigm Fund vs. Kinetics Small Cap
Performance |
| Timeline |
| Kinetics Paradigm |
| Kinetics Small Cap |
Kinetics Paradigm and Kinetics Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kinetics Paradigm and Kinetics Small
The main advantage of trading using opposite Kinetics Paradigm and Kinetics Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kinetics Paradigm position performs unexpectedly, Kinetics Small 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 Small will offset losses from the drop in Kinetics Small's long position.| Kinetics Paradigm vs. Kinetics Global Fund | Kinetics Paradigm vs. Kinetics Global Fund | Kinetics Paradigm vs. Kinetics Paradigm Fund | Kinetics Paradigm vs. Kinetics Internet Fund |
| Kinetics Small vs. Kinetics Paradigm Fund | Kinetics Small vs. Kinetics Market Opportunities | Kinetics Small vs. Pear Tree Polaris | Kinetics Small vs. Amg Managers Loomis |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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