Correlation Between Metropolitan West and Kinetics Paradigm
Can any of the company-specific risk be diversified away by investing in both Metropolitan West and Kinetics Paradigm 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 Metropolitan West and Kinetics Paradigm into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Metropolitan West High and Kinetics Paradigm Fund, you can compare the effects of market volatilities on Metropolitan West and Kinetics Paradigm 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 Metropolitan West with a short position of Kinetics Paradigm. Check out your portfolio center. Please also check ongoing floating volatility patterns of Metropolitan West and Kinetics Paradigm.
Diversification Opportunities for Metropolitan West and Kinetics Paradigm
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Metropolitan and Kinetics is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Metropolitan West High and Kinetics Paradigm Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kinetics Paradigm and Metropolitan West 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 Metropolitan West High are associated (or correlated) with Kinetics Paradigm. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kinetics Paradigm has no effect on the direction of Metropolitan West i.e., Metropolitan West and Kinetics Paradigm go up and down completely randomly.
Pair Corralation between Metropolitan West and Kinetics Paradigm
Assuming the 90 days horizon Metropolitan West is expected to generate 52.14 times less return on investment than Kinetics Paradigm. But when comparing it to its historical volatility, Metropolitan West High is 23.49 times less risky than Kinetics Paradigm. It trades about 0.21 of its potential returns per unit of risk. Kinetics Paradigm Fund is currently generating about 0.47 of returns per unit of risk over similar time horizon. If you would invest 11,416 in Kinetics Paradigm Fund on August 30, 2024 and sell it today you would earn a total of 4,354 from holding Kinetics Paradigm Fund or generate 38.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Metropolitan West High vs. Kinetics Paradigm Fund
Performance |
| Timeline |
| Metropolitan West High |
| Kinetics Paradigm |
Metropolitan West and Kinetics Paradigm Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Metropolitan West and Kinetics Paradigm
The main advantage of trading using opposite Metropolitan West and Kinetics Paradigm positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Metropolitan West position performs unexpectedly, Kinetics Paradigm 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 Paradigm will offset losses from the drop in Kinetics Paradigm's long position.| Metropolitan West vs. Federated Total Return | Metropolitan West vs. Global Bond Fund | Metropolitan West vs. Government Bond Fund | Metropolitan West vs. Aberdeen Global High |
| Kinetics Paradigm vs. Calamos Dynamic Convertible | Kinetics Paradigm vs. Putnam Convertible Incm Gwth | Kinetics Paradigm vs. Gabelli Convertible And | Kinetics Paradigm vs. Rationalpier 88 Convertible |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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