Correlation Between Balanced Fund and Kinetics Small

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

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

Diversification Opportunities for Balanced Fund and Kinetics Small

0.29

Correlation Coefficient

Balanced Fund  Kinetics Small

Modest diversification

The 3 months correlation between Balanced and Kinetics is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Balanced Fund Institutional and Kinetics Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kinetics Small Cap and Balanced Fund 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 Balanced Fund Institutional are associated (or correlated) with Kinetics Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kinetics Small Cap has no effect on the direction of Balanced Fund i.e., Balanced Fund and Kinetics Small go up and down completely randomly.

Pair Corralation between Balanced Fund and Kinetics Small

Assuming the 90 days horizon Balanced Fund Institutional is expected to under-perform the Kinetics Small. But the mutual fund apears to be less risky and, when comparing its historical volatility, Balanced Fund Institutional is 3.35 times less risky than Kinetics Small. The mutual fund trades about -0.07 of its potential returns per unit of risk. The Kinetics Small Cap is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  17,437  in Kinetics Small Cap on December 30, 2024 and sell it today you would earn a total of  1,498  from holding Kinetics Small Cap or generate 8.59% return on investment over 90 days.

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

Balanced Fund Institutional  vs.  Kinetics Small Cap

Balanced Fund Instit

Risk-Adjusted Performance

Very Weak

Over the last 90 days Balanced Fund Institutional has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Balanced Fund is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Kinetics Small Cap

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Kinetics Small Cap are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Kinetics Small may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Balanced Fund and Kinetics Small

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

The idea behind Balanced Fund Institutional and Kinetics Small Cap 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.