Correlation Between Kinetics Global and Kinetics Market

Can any of the company-specific risk be diversified away by investing in both Kinetics Global and Kinetics Market 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 Global and Kinetics Market into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Kinetics Global Fund and Kinetics Market Opportunities, you can compare the effects of market volatilities on Kinetics Global and Kinetics Market 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 Global with a short position of Kinetics Market. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kinetics Global and Kinetics Market.

Diversification Opportunities for Kinetics Global and Kinetics Market

0.88

Correlation Coefficient

Kinetics Global  Kinetics Market

Very poor diversification

The 3 months correlation between Kinetics and Kinetics is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Kinetics Global Fund and Kinetics Market Opportunities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kinetics Market Oppo and Kinetics Global 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 Global Fund are associated (or correlated) with Kinetics Market. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kinetics Market Oppo has no effect on the direction of Kinetics Global i.e., Kinetics Global and Kinetics Market go up and down completely randomly.

Pair Corralation between Kinetics Global and Kinetics Market

Assuming the 90 days horizon Kinetics Global Fund is expected to under-perform the Kinetics Market. But the mutual fund apears to be less risky and, when comparing its historical volatility, Kinetics Global Fund is 1.07 times less risky than Kinetics Market. The mutual fund trades about -0.21 of its potential returns per unit of risk. The Kinetics Market Opportunities is currently generating about -0.15 of returns per unit of risk over similar time horizon. If you would invest  4,715  in Kinetics Market Opportunities on March 18, 2024 and sell it today you would lose (1,182) from holding Kinetics Market Opportunities or give up 25.07% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

Kinetics Global Fund  vs.  Kinetics Market Opportunities

Kinetics Global

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kinetics Global Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's fundamental indicators remain fairly strong which may send shares a bit higher in July 2024. The current disturbance may also be a sign of long term up-swing for the fund investors.

Kinetics Market Oppo

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kinetics Market Opportunities has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's fundamental indicators remain fairly strong which may send shares a bit higher in July 2024. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with Kinetics Global and Kinetics Market

The main advantage of trading using opposite Kinetics Global and Kinetics Market positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kinetics Global position performs unexpectedly, Kinetics Market 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 Market will offset losses from the drop in Kinetics Market's long position.

The idea behind Kinetics Global Fund and Kinetics Market Opportunities pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.