Correlation Between Kinetics Paradigm and New Alternatives

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Can any of the company-specific risk be diversified away by investing in both Kinetics Paradigm and New Alternatives 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 New Alternatives 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 New Alternatives Fund, you can compare the effects of market volatilities on Kinetics Paradigm and New Alternatives 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 New Alternatives. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kinetics Paradigm and New Alternatives.

Diversification Opportunities for Kinetics Paradigm and New Alternatives

-0.66
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Kinetics and New is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Kinetics Paradigm Fund and New Alternatives Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Alternatives 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 New Alternatives. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Alternatives has no effect on the direction of Kinetics Paradigm i.e., Kinetics Paradigm and New Alternatives go up and down completely randomly.

Pair Corralation between Kinetics Paradigm and New Alternatives

Assuming the 90 days horizon Kinetics Paradigm Fund is expected to generate 1.64 times more return on investment than New Alternatives. However, Kinetics Paradigm is 1.64 times more volatile than New Alternatives Fund. It trades about 0.15 of its potential returns per unit of risk. New Alternatives Fund is currently generating about -0.01 per unit of risk. If you would invest  5,885  in Kinetics Paradigm Fund on August 30, 2024 and sell it today you would earn a total of  9,885  from holding Kinetics Paradigm Fund or generate 167.97% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Kinetics Paradigm Fund  vs.  New Alternatives Fund

 Performance 
       Timeline  
Kinetics Paradigm 

Risk-Adjusted Performance

29 of 100

 
Weak
 
Strong
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Kinetics Paradigm Fund are ranked lower than 29 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly unsteady fundamental indicators, Kinetics Paradigm showed solid returns over the last few months and may actually be approaching a breakup point.
New Alternatives 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days New Alternatives Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, New Alternatives is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Kinetics Paradigm and New Alternatives Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Kinetics Paradigm and New Alternatives

The main advantage of trading using opposite Kinetics Paradigm and New Alternatives positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kinetics Paradigm position performs unexpectedly, New Alternatives 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 New Alternatives will offset losses from the drop in New Alternatives' long position.
The idea behind Kinetics Paradigm Fund and New Alternatives 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.
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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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