Correlation Between Kinetics Global and American Balanced
Can any of the company-specific risk be diversified away by investing in both Kinetics Global and American Balanced 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 American Balanced 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 American Balanced Fund, you can compare the effects of market volatilities on Kinetics Global and American Balanced 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 American Balanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kinetics Global and American Balanced.
Diversification Opportunities for Kinetics Global and American Balanced
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Kinetics and American is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding KINETICS GLOBAL FUND and AMERICAN BALANCED FUND in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Balanced Fund 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 American Balanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Balanced Fund has no effect on the direction of Kinetics Global i.e., Kinetics Global and American Balanced go up and down completely randomly.
Pair Corralation between Kinetics Global and American Balanced
Assuming the 90 days horizon Kinetics Global Fund is expected to generate 4.18 times more return on investment than American Balanced. However, Kinetics Global is 4.18 times more volatile than American Balanced Fund. It trades about 0.24 of its potential returns per unit of risk. American Balanced Fund is currently generating about 0.27 per unit of risk. If you would invest 1,070 in Kinetics Global Fund on December 29, 2023 and sell it today you would earn a total of 117.00 from holding Kinetics Global Fund or generate 10.93% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 95.65% |
Values | Daily Returns |
KINETICS GLOBAL FUND vs. AMERICAN BALANCED FUND
Performance |
Timeline |
Kinetics Global Fund |
American Balanced Fund |
Kinetics Global and American Balanced Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Kinetics Global and American Balanced
The main advantage of trading using opposite Kinetics Global and American Balanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kinetics Global position performs unexpectedly, American Balanced 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 American Balanced will offset losses from the drop in American Balanced's long position.Kinetics Global vs. Dupont De Nemours | Kinetics Global vs. SCOR PK | Kinetics Global vs. Franklin Strategic Mortgage | Kinetics Global vs. Barloworld Ltd ADR |
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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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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