Correlation Between Kinetics Paradigm and Heartland Value
Can any of the company-specific risk be diversified away by investing in both Kinetics Paradigm and Heartland Value 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 Heartland Value 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 Heartland Value Plus, you can compare the effects of market volatilities on Kinetics Paradigm and Heartland Value 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 Heartland Value. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kinetics Paradigm and Heartland Value.
Diversification Opportunities for Kinetics Paradigm and Heartland Value
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Kinetics and Heartland is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Kinetics Paradigm Fund and Heartland Value Plus in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Heartland Value Plus 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 Heartland Value. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Heartland Value Plus has no effect on the direction of Kinetics Paradigm i.e., Kinetics Paradigm and Heartland Value go up and down completely randomly.
Pair Corralation between Kinetics Paradigm and Heartland Value
Assuming the 90 days horizon Kinetics Paradigm Fund is expected to generate 1.58 times more return on investment than Heartland Value. However, Kinetics Paradigm is 1.58 times more volatile than Heartland Value Plus. It trades about 0.13 of its potential returns per unit of risk. Heartland Value Plus is currently generating about 0.02 per unit of risk. If you would invest 7,940 in Kinetics Paradigm Fund on August 24, 2024 and sell it today you would earn a total of 11,464 from holding Kinetics Paradigm Fund or generate 144.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kinetics Paradigm Fund vs. Heartland Value Plus
Performance |
| Timeline |
| Kinetics Paradigm |
| Heartland Value Plus |
Kinetics Paradigm and Heartland Value Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kinetics Paradigm and Heartland Value
The main advantage of trading using opposite Kinetics Paradigm and Heartland Value positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kinetics Paradigm position performs unexpectedly, Heartland Value 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 Heartland Value will offset losses from the drop in Heartland Value's long position.| 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 |
| Heartland Value vs. Heartland Value Fund | Heartland Value vs. Large Cap Fund | Heartland Value vs. Amg Yacktman Fund | Heartland Value vs. Wasatch Large Cap |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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