Correlation Between Global Technology and Kinetics Global

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

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

Diversification Opportunities for Global Technology and Kinetics Global

0.84

Correlation Coefficient

Global Technology  Kinetics Global

Very poor diversification

The 3 months correlation between Global and Kinetics is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Global Technology Portfolio and Kinetics Global Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kinetics Global and Global Technology 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 Global Technology Portfolio 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 Global Technology i.e., Global Technology and Kinetics Global go up and down completely randomly.

Pair Corralation between Global Technology and Kinetics Global

Assuming the 90 days horizon Global Technology is expected to generate 2.89 times less return on investment than Kinetics Global. But when comparing it to its historical volatility, Global Technology Portfolio is 1.39 times less risky than Kinetics Global. It trades about 0.15 of its potential returns per unit of risk. Kinetics Global Fund is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest  1,258  in Kinetics Global Fund on September 12, 2024 and sell it today you would earn a total of  423.00  from holding Kinetics Global Fund or generate 33.62% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.44%
Values	Daily Returns

Global Technology Portfolio  vs.  Kinetics Global Fund

Global Technology

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Global Technology Portfolio are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Global Technology may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Kinetics Global

Risk-Adjusted Performance

24 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Kinetics Global Fund are ranked lower than 24 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Kinetics Global showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Global Technology and Kinetics Global

The main advantage of trading using opposite Global Technology and Kinetics Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Technology 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 Global Technology Portfolio 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.