Correlation Between Kinetics Paradigm and The Arbitrage
Can any of the company-specific risk be diversified away by investing in both Kinetics Paradigm and The Arbitrage 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 Kinetics Paradigm and The Arbitrage into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kinetics Paradigm Fund and The Arbitrage Credit, you can compare the effects of market volatilities on Kinetics Paradigm and The Arbitrage 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 Kinetics Paradigm with a short position of The Arbitrage. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kinetics Paradigm and The Arbitrage.
Diversification Opportunities for Kinetics Paradigm and The Arbitrage
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Kinetics and The is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Kinetics Paradigm Fund and The Arbitrage Credit in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arbitrage Credit and Kinetics Paradigm 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 Kinetics Paradigm Fund are associated (or correlated) with The Arbitrage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arbitrage Credit has no effect on the direction of Kinetics Paradigm i.e., Kinetics Paradigm and The Arbitrage go up and down completely randomly.
Pair Corralation between Kinetics Paradigm and The Arbitrage
Assuming the 90 days horizon Kinetics Paradigm Fund is expected to generate 18.33 times more return on investment than The Arbitrage. However, Kinetics Paradigm is 18.33 times more volatile than The Arbitrage Credit. It trades about 0.23 of its potential returns per unit of risk. The Arbitrage Credit is currently generating about 0.17 per unit of risk. If you would invest 7,313 in Kinetics Paradigm Fund on August 25, 2024 and sell it today you would earn a total of 12,091 from holding Kinetics Paradigm Fund or generate 165.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kinetics Paradigm Fund vs. The Arbitrage Credit
Performance |
| Timeline |
| Kinetics Paradigm |
| Arbitrage Credit |
Kinetics Paradigm and The Arbitrage Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kinetics Paradigm and The Arbitrage
The main advantage of trading using opposite Kinetics Paradigm and The Arbitrage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kinetics Paradigm position performs unexpectedly, The Arbitrage 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 The Arbitrage will offset losses from the drop in The Arbitrage's long position.| Kinetics Paradigm vs. Kinetics Global Fund | Kinetics Paradigm vs. Kinetics Global Fund | Kinetics Paradigm vs. Kinetics Internet Fund | Kinetics Paradigm vs. Kinetics Global Fund |
| The Arbitrage vs. The Arbitrage Fund | The Arbitrage vs. The Arbitrage Fund | The Arbitrage vs. The Arbitrage Fund | The Arbitrage vs. The Arbitrage Fund |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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