Correlation Between Guidemark(r) Small/mid and Kinetics Small

Can any of the company-specific risk be diversified away by investing in both Guidemark(r) Small/mid 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 Guidemark(r) Small/mid and Kinetics Small into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Guidemark Smallmid Cap and Kinetics Small Cap, you can compare the effects of market volatilities on Guidemark(r) Small/mid 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 Guidemark(r) Small/mid with a short position of Kinetics Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guidemark(r) Small/mid and Kinetics Small.

Diversification Opportunities for Guidemark(r) Small/mid and Kinetics Small

0.47

Correlation Coefficient

Guidemark(r) Small/mid  Kinetics Small

Very weak diversification

The 3 months correlation between Guidemark(r) and Kinetics is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Guidemark Smallmid Cap 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 Guidemark(r) Small/mid 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 Guidemark Smallmid Cap 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 Guidemark(r) Small/mid i.e., Guidemark(r) Small/mid and Kinetics Small go up and down completely randomly.

Pair Corralation between Guidemark(r) Small/mid and Kinetics Small

Assuming the 90 days horizon Guidemark Smallmid Cap is expected to under-perform the Kinetics Small. But the mutual fund apears to be less risky and, when comparing its historical volatility, Guidemark Smallmid Cap is 1.39 times less risky than Kinetics Small. The mutual fund trades about -0.18 of its potential returns per unit of risk. The Kinetics Small Cap is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest  21,497  in Kinetics Small Cap on December 2, 2024 and sell it today you would lose (1,555) from holding Kinetics Small Cap or give up 7.23% of portfolio value over 90 days.

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

Guidemark Smallmid Cap  vs.  Kinetics Small Cap

Guidemark Smallmid Cap

Risk-Adjusted Performance

Very Weak

Over the last 90 days Guidemark Smallmid Cap 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 primary indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Kinetics Small Cap

Risk-Adjusted Performance

Very Weak

Over the last 90 days Kinetics Small Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Guidemark(r) Small/mid and Kinetics Small

The main advantage of trading using opposite Guidemark(r) Small/mid and Kinetics Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guidemark(r) Small/mid 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 Guidemark Smallmid Cap 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.