Correlation Between Western Asset and Kinetics Paradigm
Can any of the company-specific risk be diversified away by investing in both Western Asset 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 Western Asset and Kinetics Paradigm into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western Asset Diversified and Kinetics Paradigm Fund, you can compare the effects of market volatilities on Western Asset 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 Western Asset with a short position of Kinetics Paradigm. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and Kinetics Paradigm.
Diversification Opportunities for Western Asset and Kinetics Paradigm
-0.79 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Western and Kinetics is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset Diversified and Kinetics Paradigm Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kinetics Paradigm and Western Asset 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 Western Asset Diversified 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 Western Asset i.e., Western Asset and Kinetics Paradigm go up and down completely randomly.
Pair Corralation between Western Asset and Kinetics Paradigm
Assuming the 90 days horizon Western Asset Diversified is expected to generate 0.06 times more return on investment than Kinetics Paradigm. However, Western Asset Diversified is 15.82 times less risky than Kinetics Paradigm. It trades about 0.11 of its potential returns per unit of risk. Kinetics Paradigm Fund is currently generating about -0.1 per unit of risk. If you would invest 1,545 in Western Asset Diversified on September 13, 2024 and sell it today you would earn a total of 9.00 from holding Western Asset Diversified or generate 0.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Asset Diversified vs. Kinetics Paradigm Fund
Performance |
| Timeline |
| Western Asset Diversified |
| Kinetics Paradigm |
Western Asset and Kinetics Paradigm Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Asset and Kinetics Paradigm
The main advantage of trading using opposite Western Asset and Kinetics Paradigm positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset 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.| Western Asset vs. Vanguard Total Stock | Western Asset vs. Vanguard 500 Index | Western Asset vs. Vanguard Total Stock | Western Asset vs. Vanguard Total Stock |
| Kinetics Paradigm vs. Kinetics Global Fund | Kinetics Paradigm vs. Kinetics Global Fund | Kinetics Paradigm vs. Kinetics Paradigm Fund | Kinetics Paradigm vs. Kinetics Internet 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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