Correlation Between Fundamental Large and Kinetics Paradigm
Can any of the company-specific risk be diversified away by investing in both Fundamental Large 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 Fundamental Large and Kinetics Paradigm into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fundamental Large Cap and Kinetics Paradigm Fund, you can compare the effects of market volatilities on Fundamental Large 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 Fundamental Large with a short position of Kinetics Paradigm. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fundamental Large and Kinetics Paradigm.
Diversification Opportunities for Fundamental Large and Kinetics Paradigm
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Fundamental and Kinetics is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Fundamental Large Cap and Kinetics Paradigm Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kinetics Paradigm and Fundamental Large 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 Fundamental Large Cap 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 Fundamental Large i.e., Fundamental Large and Kinetics Paradigm go up and down completely randomly.
Pair Corralation between Fundamental Large and Kinetics Paradigm
Assuming the 90 days horizon Fundamental Large is expected to generate 3.85 times less return on investment than Kinetics Paradigm. But when comparing it to its historical volatility, Fundamental Large Cap is 2.1 times less risky than Kinetics Paradigm. It trades about 0.08 of its potential returns per unit of risk. Kinetics Paradigm Fund is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 6,327 in Kinetics Paradigm Fund on September 2, 2024 and sell it today you would earn a total of 11,038 from holding Kinetics Paradigm Fund or generate 174.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fundamental Large Cap vs. Kinetics Paradigm Fund
Performance |
| Timeline |
| Fundamental Large Cap |
| Kinetics Paradigm |
Fundamental Large and Kinetics Paradigm Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fundamental Large and Kinetics Paradigm
The main advantage of trading using opposite Fundamental Large and Kinetics Paradigm positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fundamental Large 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.| Fundamental Large vs. Ambrus Core Bond | Fundamental Large vs. Thrivent Income Fund | Fundamental Large vs. Touchstone Premium Yield | Fundamental Large vs. Rationalpier 88 Convertible |
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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 Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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