Correlation Between Vanguard 500 and Kinetics Paradigm
Can any of the company-specific risk be diversified away by investing in both Vanguard 500 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 Vanguard 500 and Kinetics Paradigm into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard 500 Index and Kinetics Paradigm Fund, you can compare the effects of market volatilities on Vanguard 500 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 Vanguard 500 with a short position of Kinetics Paradigm. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard 500 and Kinetics Paradigm.
Diversification Opportunities for Vanguard 500 and Kinetics Paradigm
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between VANGUARD and Kinetics is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard 500 Index and Kinetics Paradigm Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kinetics Paradigm and Vanguard 500 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 Vanguard 500 Index 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 Vanguard 500 i.e., Vanguard 500 and Kinetics Paradigm go up and down completely randomly.
Pair Corralation between Vanguard 500 and Kinetics Paradigm
Assuming the 90 days horizon Vanguard 500 is expected to generate 12.58 times less return on investment than Kinetics Paradigm. But when comparing it to its historical volatility, Vanguard 500 Index is 3.65 times less risky than Kinetics Paradigm. It trades about 0.15 of its potential returns per unit of risk. Kinetics Paradigm Fund is currently generating about 0.51 of returns per unit of risk over similar time horizon. If you would invest 11,238 in Kinetics Paradigm Fund on August 27, 2024 and sell it today you would earn a total of 4,289 from holding Kinetics Paradigm Fund or generate 38.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard 500 Index vs. Kinetics Paradigm Fund
Performance |
| Timeline |
| Vanguard 500 Index |
| Kinetics Paradigm |
Vanguard 500 and Kinetics Paradigm Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard 500 and Kinetics Paradigm
The main advantage of trading using opposite Vanguard 500 and Kinetics Paradigm positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard 500 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.| Vanguard 500 vs. Vanguard Total Stock | Vanguard 500 vs. Vanguard Mid Cap Index | Vanguard 500 vs. Vanguard Small Cap Index | Vanguard 500 vs. Vanguard Total Bond |
| Kinetics Paradigm vs. T Rowe Price | Kinetics Paradigm vs. Rbb Fund Trust | Kinetics Paradigm vs. Kinetics Global Fund | Kinetics Paradigm vs. Dodge Global Stock |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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