Correlation Between Pimco Funds and Kinetics Global

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

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

Diversification Opportunities for Pimco Funds and Kinetics Global

0.66

Correlation Coefficient

Pimco Funds  Kinetics Global

Poor diversification

The 3 months correlation between Pimco and Kinetics is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Pimco Funds and Kinetics Global Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kinetics Global and Pimco Funds 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 Pimco Funds are associated (or correlated) with Kinetics Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kinetics Global has no effect on the direction of Pimco Funds i.e., Pimco Funds and Kinetics Global go up and down completely randomly.

Pair Corralation between Pimco Funds and Kinetics Global

Assuming the 90 days horizon Pimco Funds is expected to generate 33.99 times less return on investment than Kinetics Global. But when comparing it to its historical volatility, Pimco Funds is 11.46 times less risky than Kinetics Global. It trades about 0.13 of its potential returns per unit of risk. Kinetics Global Fund is currently generating about 0.37 of returns per unit of risk over similar time horizon. If you would invest  1,150  in Kinetics Global Fund on September 4, 2024 and sell it today you would earn a total of  458.00  from holding Kinetics Global Fund or generate 39.83% return on investment over 90 days.

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

Pimco Funds   vs.  Kinetics Global Fund

Pimco Funds

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Pimco Funds are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Pimco Funds is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Kinetics Global

Risk-Adjusted Performance

29 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Kinetics Global Fund are ranked lower than 29 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Kinetics Global showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Pimco Funds and Kinetics Global

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

The idea behind Pimco Funds and Kinetics Global Fund 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.

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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.