Correlation Between Kinetics Paradigm and Jacob Small
Can any of the company-specific risk be diversified away by investing in both Kinetics Paradigm and Jacob Small 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 Jacob Small 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 Jacob Small Cap, you can compare the effects of market volatilities on Kinetics Paradigm and Jacob Small 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 Jacob Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kinetics Paradigm and Jacob Small.
Diversification Opportunities for Kinetics Paradigm and Jacob Small
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Kinetics and Jacob is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Kinetics Paradigm Fund and Jacob Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jacob Small Cap 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 Jacob Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jacob Small Cap has no effect on the direction of Kinetics Paradigm i.e., Kinetics Paradigm and Jacob Small go up and down completely randomly.
Pair Corralation between Kinetics Paradigm and Jacob Small
Assuming the 90 days horizon Kinetics Paradigm Fund is expected to generate 1.15 times more return on investment than Jacob Small. However, Kinetics Paradigm is 1.15 times more volatile than Jacob Small Cap. It trades about 0.27 of its potential returns per unit of risk. Jacob Small Cap is currently generating about 0.08 per unit of risk. If you would invest 8,414 in Kinetics Paradigm Fund on September 1, 2024 and sell it today you would earn a total of 9,871 from holding Kinetics Paradigm Fund or generate 117.32% 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. Jacob Small Cap
Performance |
| Timeline |
| Kinetics Paradigm |
| Jacob Small Cap |
Kinetics Paradigm and Jacob Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kinetics Paradigm and Jacob Small
The main advantage of trading using opposite Kinetics Paradigm and Jacob Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kinetics Paradigm position performs unexpectedly, Jacob Small 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 Jacob Small will offset losses from the drop in Jacob Small'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 |
| Jacob Small vs. Jacob Internet Fund | Jacob Small vs. Jacob Small Cap | Jacob Small vs. Jacob Micro Cap | Jacob Small vs. Jacob Micro 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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