Correlation Between Kinetics Paradigm and Arbitrage Credit
Can any of the company-specific risk be diversified away by investing in both Kinetics Paradigm and Arbitrage Credit 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 Arbitrage Credit 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 The Arbitrage Credit, you can compare the effects of market volatilities on Kinetics Paradigm and Arbitrage Credit 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 Arbitrage Credit. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kinetics Paradigm and Arbitrage Credit.
Diversification Opportunities for Kinetics Paradigm and Arbitrage Credit
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Kinetics and Arbitrage is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Kinetics Paradigm Fund and The Arbitrage Credit in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arbitrage Credit 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 Arbitrage Credit. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arbitrage Credit has no effect on the direction of Kinetics Paradigm i.e., Kinetics Paradigm and Arbitrage Credit go up and down completely randomly.
Pair Corralation between Kinetics Paradigm and Arbitrage Credit
Assuming the 90 days horizon Kinetics Paradigm Fund is expected to generate 42.96 times more return on investment than Arbitrage Credit. However, Kinetics Paradigm is 42.96 times more volatile than The Arbitrage Credit. It trades about 0.44 of its potential returns per unit of risk. The Arbitrage Credit is currently generating about 0.19 per unit of risk. If you would invest 13,458 in Kinetics Paradigm Fund on August 29, 2024 and sell it today you would earn a total of 4,753 from holding Kinetics Paradigm Fund or generate 35.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
Kinetics Paradigm Fund vs. The Arbitrage Credit
Performance |
| Timeline |
| Kinetics Paradigm |
| Arbitrage Credit |
Kinetics Paradigm and Arbitrage Credit Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kinetics Paradigm and Arbitrage Credit
The main advantage of trading using opposite Kinetics Paradigm and Arbitrage Credit positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kinetics Paradigm position performs unexpectedly, Arbitrage Credit 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 Arbitrage Credit will offset losses from the drop in Arbitrage Credit's long position.| Kinetics Paradigm vs. T Rowe Price | Kinetics Paradigm vs. Qs Large Cap | Kinetics Paradigm vs. Balanced Fund Investor | Kinetics Paradigm vs. Ab Value Fund |
| Arbitrage Credit vs. The Arbitrage Fund | Arbitrage Credit vs. The Arbitrage Event Driven | Arbitrage Credit vs. The Arbitrage Fund | Arbitrage Credit vs. The Arbitrage Event Driven |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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