Correlation Between Kopernik International and Kopernik Global

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

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

Diversification Opportunities for Kopernik International and Kopernik Global

0.98

Correlation Coefficient

Kopernik International  Kopernik Global

Almost no diversification

The 3 months correlation between Kopernik and Kopernik is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Kopernik International Fund and Kopernik Global All Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kopernik Global All and Kopernik International 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 Kopernik International Fund are associated (or correlated) with Kopernik Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kopernik Global All has no effect on the direction of Kopernik International i.e., Kopernik International and Kopernik Global go up and down completely randomly.

Pair Corralation between Kopernik International and Kopernik Global

Assuming the 90 days horizon Kopernik International Fund is expected to under-perform the Kopernik Global. But the mutual fund apears to be less risky and, when comparing its historical volatility, Kopernik International Fund is 1.05 times less risky than Kopernik Global. The mutual fund trades about -0.07 of its potential returns per unit of risk. The Kopernik Global All Cap is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  1,231  in Kopernik Global All Cap on September 17, 2024 and sell it today you would lose (25.00) from holding Kopernik Global All Cap or give up 2.03% of portfolio value over 90 days.

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

Kopernik International Fund  vs.  Kopernik Global All Cap

Kopernik International

Risk-Adjusted Performance

0 of 100

Very Weak

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

Kopernik Global All

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Kopernik International and Kopernik Global

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

The idea behind Kopernik International Fund and Kopernik Global All 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.