Correlation Between Kinetics Paradigm and Sierra Strategic
Can any of the company-specific risk be diversified away by investing in both Kinetics Paradigm and Sierra Strategic 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 Sierra Strategic 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 Sierra Strategic Income, you can compare the effects of market volatilities on Kinetics Paradigm and Sierra Strategic 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 Sierra Strategic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kinetics Paradigm and Sierra Strategic.
Diversification Opportunities for Kinetics Paradigm and Sierra Strategic
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Kinetics and Sierra is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Kinetics Paradigm Fund and Sierra Strategic Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sierra Strategic Income 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 Sierra Strategic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sierra Strategic Income has no effect on the direction of Kinetics Paradigm i.e., Kinetics Paradigm and Sierra Strategic go up and down completely randomly.
Pair Corralation between Kinetics Paradigm and Sierra Strategic
Assuming the 90 days horizon Kinetics Paradigm Fund is expected to generate 18.91 times more return on investment than Sierra Strategic. However, Kinetics Paradigm is 18.91 times more volatile than Sierra Strategic Income. It trades about 0.66 of its potential returns per unit of risk. Sierra Strategic Income is currently generating about 0.14 per unit of risk. If you would invest 11,224 in Kinetics Paradigm Fund on August 26, 2024 and sell it today you would earn a total of 5,213 from holding Kinetics Paradigm Fund or generate 46.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kinetics Paradigm Fund vs. Sierra Strategic Income
Performance |
| Timeline |
| Kinetics Paradigm |
| Sierra Strategic Income |
Kinetics Paradigm and Sierra Strategic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kinetics Paradigm and Sierra Strategic
The main advantage of trading using opposite Kinetics Paradigm and Sierra Strategic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kinetics Paradigm position performs unexpectedly, Sierra Strategic 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 Sierra Strategic will offset losses from the drop in Sierra Strategic's long position.| Kinetics Paradigm vs. Goldman Sachs High | Kinetics Paradigm vs. Morningstar Aggressive Growth | Kinetics Paradigm vs. Metropolitan West High | Kinetics Paradigm vs. California High Yield Municipal |
| Sierra Strategic vs. Sierra Tactical Risk | Sierra Strategic vs. Sierra Tactical Risk | Sierra Strategic vs. Sierra Tactical Risk | Sierra Strategic vs. Sierra Tactical Bond |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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