Correlation Between Mid Cap and Kinetics Global
Can any of the company-specific risk be diversified away by investing in both Mid Cap and Kinetics Global 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 Mid Cap and Kinetics Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mid Cap 15x Strategy and Kinetics Global Fund, you can compare the effects of market volatilities on Mid Cap and Kinetics Global 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 Mid Cap with a short position of Kinetics Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mid Cap and Kinetics Global.
Diversification Opportunities for Mid Cap and Kinetics Global
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Mid and Kinetics is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Mid Cap 15x Strategy and Kinetics Global Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kinetics Global and Mid Cap 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 Mid Cap 15x Strategy are associated (or correlated) with Kinetics Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kinetics Global has no effect on the direction of Mid Cap i.e., Mid Cap and Kinetics Global go up and down completely randomly.
Pair Corralation between Mid Cap and Kinetics Global
Assuming the 90 days horizon Mid Cap 15x Strategy is expected to under-perform the Kinetics Global. But the mutual fund apears to be less risky and, when comparing its historical volatility, Mid Cap 15x Strategy is 1.25 times less risky than Kinetics Global. The mutual fund trades about -0.13 of its potential returns per unit of risk. The Kinetics Global Fund is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 1,475 in Kinetics Global Fund on October 9, 2024 and sell it today you would earn a total of 67.00 from holding Kinetics Global Fund or generate 4.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mid Cap 15x Strategy vs. Kinetics Global Fund
Performance |
| Timeline |
| Mid Cap 15x |
| Kinetics Global |
Mid Cap and Kinetics Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mid Cap and Kinetics Global
The main advantage of trading using opposite Mid Cap and Kinetics Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mid Cap position performs unexpectedly, Kinetics Global 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 Global will offset losses from the drop in Kinetics Global's long position.| Mid Cap vs. Basic Materials Fund | Mid Cap vs. Basic Materials Fund | Mid Cap vs. Banking Fund Class | Mid Cap vs. Basic Materials 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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