Correlation Between Kinetics Paradigm and Wells Fargo
Can any of the company-specific risk be diversified away by investing in both Kinetics Paradigm and Wells Fargo 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 Wells Fargo 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 Wells Fargo Advantage, you can compare the effects of market volatilities on Kinetics Paradigm and Wells Fargo 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 Wells Fargo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kinetics Paradigm and Wells Fargo.
Diversification Opportunities for Kinetics Paradigm and Wells Fargo
-0.79 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Kinetics and Wells is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding Kinetics Paradigm Fund and Wells Fargo Advantage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wells Fargo Advantage 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 Wells Fargo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wells Fargo Advantage has no effect on the direction of Kinetics Paradigm i.e., Kinetics Paradigm and Wells Fargo go up and down completely randomly.
Pair Corralation between Kinetics Paradigm and Wells Fargo
Assuming the 90 days horizon Kinetics Paradigm Fund is expected to generate 7.2 times more return on investment than Wells Fargo. However, Kinetics Paradigm is 7.2 times more volatile than Wells Fargo Advantage. It trades about 0.27 of its potential returns per unit of risk. Wells Fargo Advantage is currently generating about 0.09 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 Against |
| Strength | Weak |
| Accuracy | 99.21% |
| Values | Daily Returns |
Kinetics Paradigm Fund vs. Wells Fargo Advantage
Performance |
| Timeline |
| Kinetics Paradigm |
| Wells Fargo Advantage |
Kinetics Paradigm and Wells Fargo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kinetics Paradigm and Wells Fargo
The main advantage of trading using opposite Kinetics Paradigm and Wells Fargo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kinetics Paradigm position performs unexpectedly, Wells Fargo 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 Wells Fargo will offset losses from the drop in Wells Fargo'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 |
| Wells Fargo vs. Applied Finance Explorer | Wells Fargo vs. Hennessy Nerstone Mid | Wells Fargo vs. Royce Opportunity Fund | Wells Fargo vs. Mutual Of America |
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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