Correlation Between Ishares Municipal and Kinetics Global

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

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

Diversification Opportunities for Ishares Municipal and Kinetics Global

0.04

Correlation Coefficient

Ishares Municipal  Kinetics Global

Significant diversification

The 3 months correlation between Ishares and Kinetics is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Ishares Municipal Bond and Kinetics Global Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kinetics Global and Ishares Municipal 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 Ishares Municipal Bond 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 Ishares Municipal i.e., Ishares Municipal and Kinetics Global go up and down completely randomly.

Pair Corralation between Ishares Municipal and Kinetics Global

Assuming the 90 days horizon Ishares Municipal Bond is expected to generate 0.19 times more return on investment than Kinetics Global. However, Ishares Municipal Bond is 5.3 times less risky than Kinetics Global. It trades about -0.33 of its potential returns per unit of risk. Kinetics Global Fund is currently generating about -0.2 per unit of risk. If you would invest  1,120  in Ishares Municipal Bond on October 5, 2024 and sell it today you would lose (20.00) from holding Ishares Municipal Bond or give up 1.79% of portfolio value over 90 days.

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

Ishares Municipal Bond  vs.  Kinetics Global Fund

Ishares Municipal Bond

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ishares Municipal Bond has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Ishares Municipal 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

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Kinetics Global Fund are ranked lower than 14 (%) 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 Ishares Municipal and Kinetics Global

The main advantage of trading using opposite Ishares Municipal and Kinetics Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ishares Municipal 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 Ishares Municipal Bond 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.

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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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.