Correlation Between Royce Smaller and Kinetics Paradigm
Can any of the company-specific risk be diversified away by investing in both Royce Smaller 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 Royce Smaller and Kinetics Paradigm into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Royce Smaller Companies Growth and Kinetics Paradigm Fund, you can compare the effects of market volatilities on Royce Smaller 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 Royce Smaller with a short position of Kinetics Paradigm. Check out your portfolio center. Please also check ongoing floating volatility patterns of Royce Smaller and Kinetics Paradigm.
Diversification Opportunities for Royce Smaller and Kinetics Paradigm
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Royce and Kinetics is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Royce Smaller Companies Growth and Kinetics Paradigm Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kinetics Paradigm and Royce Smaller 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 Royce Smaller Companies Growth 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 Royce Smaller i.e., Royce Smaller and Kinetics Paradigm go up and down completely randomly.
Pair Corralation between Royce Smaller and Kinetics Paradigm
Assuming the 90 days horizon Royce Smaller is expected to generate 3.98 times less return on investment than Kinetics Paradigm. But when comparing it to its historical volatility, Royce Smaller Companies Growth is 1.07 times less risky than Kinetics Paradigm. It trades about 0.2 of its potential returns per unit of risk. Kinetics Paradigm Fund is currently generating about 0.74 of returns per unit of risk over similar time horizon. If you would invest 13,116 in Kinetics Paradigm Fund on August 24, 2024 and sell it today you would earn a total of 4,366 from holding Kinetics Paradigm Fund or generate 33.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
Royce Smaller Companies Growth vs. Kinetics Paradigm Fund
Performance |
| Timeline |
| Royce Smaller Companies |
| Kinetics Paradigm |
Royce Smaller and Kinetics Paradigm Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Royce Smaller and Kinetics Paradigm
The main advantage of trading using opposite Royce Smaller and Kinetics Paradigm positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Royce Smaller 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.| Royce Smaller vs. Royce Small Cap Value | Royce Smaller vs. Marsico 21st Century | Royce Smaller vs. Kinetics Paradigm Fund | Royce Smaller vs. Hodges Fund Retail |
| Kinetics Paradigm vs. Kinetics Small Cap | Kinetics Paradigm vs. Marsico 21st Century | Kinetics Paradigm vs. Royce Smaller Companies Growth | Kinetics Paradigm vs. Hodges Fund Retail |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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