Correlation Between Kinetics Paradigm and Sierra Tactical
Can any of the company-specific risk be diversified away by investing in both Kinetics Paradigm and Sierra Tactical 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 Tactical 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 Tactical Bond, you can compare the effects of market volatilities on Kinetics Paradigm and Sierra Tactical 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 Tactical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kinetics Paradigm and Sierra Tactical.
Diversification Opportunities for Kinetics Paradigm and Sierra Tactical
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Kinetics and Sierra is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Kinetics Paradigm Fund and Sierra Tactical Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sierra Tactical Bond 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 Tactical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sierra Tactical Bond has no effect on the direction of Kinetics Paradigm i.e., Kinetics Paradigm and Sierra Tactical go up and down completely randomly.
Pair Corralation between Kinetics Paradigm and Sierra Tactical
Assuming the 90 days horizon Kinetics Paradigm Fund is expected to generate 12.93 times more return on investment than Sierra Tactical. However, Kinetics Paradigm is 12.93 times more volatile than Sierra Tactical Bond. It trades about 0.27 of its potential returns per unit of risk. Sierra Tactical Bond is currently generating about 0.2 per unit of risk. If you would invest 7,152 in Kinetics Paradigm Fund on September 1, 2024 and sell it today you would earn a total of 8,334 from holding Kinetics Paradigm Fund or generate 116.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.21% |
| Values | Daily Returns |
Kinetics Paradigm Fund vs. Sierra Tactical Bond
Performance |
| Timeline |
| Kinetics Paradigm |
| Sierra Tactical Bond |
Kinetics Paradigm and Sierra Tactical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kinetics Paradigm and Sierra Tactical
The main advantage of trading using opposite Kinetics Paradigm and Sierra Tactical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kinetics Paradigm position performs unexpectedly, Sierra Tactical 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 Tactical will offset losses from the drop in Sierra Tactical'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 |
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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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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