Correlation Between SCOR PK and Kinetics Paradigm
Can any of the company-specific risk be diversified away by investing in both SCOR PK 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 SCOR PK and Kinetics Paradigm into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SCOR PK and Kinetics Paradigm Fund, you can compare the effects of market volatilities on SCOR PK 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 SCOR PK with a short position of Kinetics Paradigm. Check out your portfolio center. Please also check ongoing floating volatility patterns of SCOR PK and Kinetics Paradigm.
Diversification Opportunities for SCOR PK and Kinetics Paradigm
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between SCOR and Kinetics is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding SCOR PK and Kinetics Paradigm Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kinetics Paradigm and SCOR PK 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 SCOR PK 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 SCOR PK i.e., SCOR PK and Kinetics Paradigm go up and down completely randomly.
Pair Corralation between SCOR PK and Kinetics Paradigm
Assuming the 90 days horizon SCOR PK is expected to generate 17.15 times less return on investment than Kinetics Paradigm. In addition to that, SCOR PK is 1.51 times more volatile than Kinetics Paradigm Fund. It trades about 0.0 of its total potential returns per unit of risk. Kinetics Paradigm Fund is currently generating about 0.12 per unit of volatility. If you would invest 6,808 in Kinetics Paradigm Fund on September 12, 2024 and sell it today you would earn a total of 8,188 from holding Kinetics Paradigm Fund or generate 120.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.15% |
| Values | Daily Returns |
SCOR PK vs. Kinetics Paradigm Fund
Performance |
| Timeline |
| SCOR PK |
| Kinetics Paradigm |
SCOR PK and Kinetics Paradigm Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SCOR PK and Kinetics Paradigm
The main advantage of trading using opposite SCOR PK and Kinetics Paradigm positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SCOR PK 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.The idea behind SCOR PK and Kinetics Paradigm Fund pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Kinetics Paradigm vs. T Rowe Price | Kinetics Paradigm vs. T Rowe Price | Kinetics Paradigm vs. T Rowe Price | Kinetics Paradigm vs. SCOR PK |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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